LaPolla Industries (LPAD) CORRESP Correspondence with SEC

LaPolla Industries, Inc. Intercontinental Business Park 15402 Vantage Parkway East, Suite 322 Houston, Texas  77032 281.219.4700 Fax 281.219.4710

March 17, 2006

File No. 1-31354

Attn:  Rufus Decker

Accounting Branch Chief

Division of Corporation Finance

United States

Securities and Exchange Commission

Washington, D.C. 20549-7010

Re:            Response to Review Letter dated March 9, 2006

Dear Mr. Decker:

Please find herein our responses ordered in the manner in which they were presented to the above reference for your review and consideration.

We wish to continue reiterating our appreciation for the manner in which you are guiding us in our compliance with applicable disclosure requirements and, more importantly, the enhancement of our presentation to our shareholders in our periodic filings.

DRAFT FORM 10-K/A FOR THE YEAR ENDED DECEMBER 31, 2004

General

Comment 1.  Where a comment below requests additional disclosures or other revisions, please show us your revised disclosure in your response.

Response 1.  We acknowledge your remarks and have included our revised disclosure in our responses to your comments.

Comment 2.  Please label each of your financial statements as “Restated.” In this regard, each column of your balance sheets and statements of operations and cash flows should be individually labeled as restated. Please also label your statement of stockholders’ equity as restated and remove the “As Previously Reported” line item. The statement should reflect the activity in your equity accounts after all corrections.

Response 2.  We acknowledge your requirement and have labeled not only our financial statements as “Restated” but also the financial data in Item 6 - Selected Financial Data (SeeExhibit 1 - Draft Form 10-K/A-2, Page A-2-8) and Note 19 - Selected Quarterly Financial Data - Unaudited (SeeExhibit 1 - Draft Form 10-K/A-2, Page F/A-2-24).

Item 9A - Controls and Procedures, page A-2-11

Comment 3.  Your proposed disclosure indicates there were no significant changes in your internal controls over financial reporting subsequent to the date of your amended report. Item 308(c) of Regulation S-K requires you to disclose whether there were any changes in your internal controls and procedures during the most recently completed quarter included in your filing. Please revise your disclosure to clarify whether there were changes in your internal controls and procedures during the fourth quarter of 2004.

Response 3.  We have revised our disclosure accordingly (SeeExhibit 1 - Draft Form 10-K/A-2, Page A-2-12). Our proposed revision is provided below.

Proposed Revision

“…There were no changes in our internal controls during the fourth quarter of 2004. There were significant changes in our internal controls or in other factors after the end of the fourth quarter of 2004 as described above. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.”

1

Comment 4.  You have included a discussion of the limitations of all control systems under the headings Controls and Procedures. Specifically, you state, “[t]he design of any system of controls and procedures is also based in part upon certain assumptions about the likelihood of future events, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.” Please remove such statement from future filings, as this does not appear to be a limitation of an entity’s internal control system per paragraphs 16-24 of AU Section 319, as referenced by SEC Release No. 33-8238.

Response 4.  We have reviewed paragraphs 16-24 of AU Section 319 and will eliminate the above described statement from our future filings.

Supplemental Responses

Discontinued Operations

Supplemental Response 1.  We have reevaluated our Response 13 to your Comment 13 from your Review Letter dated October 19, 2005, determined that an additional liability relates to our discontinued RSM Products operations, and have reclassified the liability on our Consolidated Balance Sheets for the applicable periods. A line of credit from Commerce bank was initially set up and used in our discontinued RSM Products operations in 2002. The line of credit was secured by all of the assets of RSM Technologies, Inc. and the Parent Company and the Chairman of the Board were co-borrowers for added security. We drew down the line of credit in 2002 in two installments and used these funds for working capital purposes in RSM Technologies, Inc. After we discontinued the operations of the RSM Technologies, Inc. subsidiary, we transferred the debt to the books of the Parent Company because of the co-borrowing feature. No other activity occurred with respect to this line of credit except for interest payments. Last week we executed documents with Commerce Bank converting this line of credit into a two year note payable. Our original disclosure in Note 9 to our financial statements and proposed revisions are provided below.

Original Disclosure

“Note 9. Lines of Credit.

The Company has two operating Lines of Credit; one with Merrill Lynch Business Financial Services, Inc., and the other with Commerce Bank, North. The maximum combined amount for the Lines of Credit total $720,000, of which $719,070 is being utilized as of December 31, 2004. The first Line of Credit is with Merrill Lynch Business Financial Services Inc. for the maximum “WCMA Line of Credit” totaling $220,000 as of December 31, 2004; bears interest at prime plus 2% per annum, and was amended to mature on March 31, 2005. It is secured by the assets of Infiniti Products, Inc. and a personal guarantee from the Chairman of the Board.  The maximum “WCMA Line of Credit” of $220,000 is being paid down on a monthly basis until the maturity date of March 31, 2005, at which time the “Maximum WCMA Line of Credit” shall be $180,000. Although the maturity date according to the Agreement is dated March 31, 2005, the Chairman of the Board, who has personally guaranteed this line of credit, will continue to pay down the line of credit by paying $20,000 per month until the balance is paid in full. The second Line of Credit is with Commerce Bank, North for $500,000; bears interest at prime plus 2% per annum, and matures on June 30, 2005. The Line of Credit was originally secured by both the assets of the Company and RSM Technologies, Inc. as well as by the Chairman of the Board. However, since the operations of RSM Technologies, Inc. were discontinued, the assets of the Company and the Chairman of the Board are now the collateral for this Line of Credit. For the years ended December 31, 2004 and 2003, the Merrill Lynch Business Financial Services, Inc. Line of Credit balances were $219,153 and $297,129, respectively, and the Commerce Bank, North Line of Credit balances were $499,918 for both respective periods.”

Proposed Revision 1A

“Note 9. Line of Credit.

The Company has an operating Line of Credit with Merrill Lynch Business Financial Services, Inc. This Line of Credit is for the maximum of $220,000, all of which is being utilized as of December 31, 2004; bears interest at prime plus 2% per annum, and was amended to mature on March 31, 2005. It is secured by the assets of Infiniti Products, Inc. and a personal guarantee from the Chairman of the Board.  The maximum “WCMA Line of Credit” of $220,000 is being paid down on a monthly basis until the maturity date of March 31, 2005, at which time the “Maximum WCMA Line of Credit” shall be $180,000. Although the maturity date according to the Agreement is dated March 31, 2005, the Chairman of the Board, who has personally guaranteed this line of credit, will continue to pay down the line of credit by paying $20,000 per month until the balance is paid in full. For the years ended December 31, 2004 and 2003, the Merrill Lynch Business Financial Services, Inc. Line of Credit balances were $219,153 and $297,129, respectively.”

2

Proposed Revision 1B

Note 3. Discontinued Operations - continued.

The assets and liabilities of the discontinued operations presented on an aggregated basis in the Consolidated Balance Sheets consist of the following amounts at December 31:

Assets	2004		2003
Cash	$	438	$	7,333
Accounts and Notes Receivable, Net		—		101,206
Inventories		—		599,242
Machinery and Equipment, Net		—		486,329
Prepaid Expenses and Other Current Assets		—		15,936
Deposits and Other Non Current Assets		—		191
Total Assets	$	438	$	1,210,237
Liabilities
Accounts Payable		662,696		1,069,079
Accrued Expenses and Other Current Liabilities		57,871		722,460
Line of Credit		499,918		499,918
Long Term Debt		—		94,429
Deferred Income		—		7,500
Reserve for Litigation		525,000		350,000
Total Liabilities	$	1,745,485	$	2,743,386

See also Note 11 - Commitments and Contingencies.

Proposed Revision 1C

Note 11. Commitments and Contingencies.

Reserve

The following is a summary of the reserve established for commitments and contingencies for the year ending December 31:

	2004
Accounts Payable - Discontinued Operations	$	662,696
Accrued Expenses and Other Current Liabilities - Discontinued Operations		57,871
Line of Credit - Discontinued Operations		499,918
Reserve for Litigation - Discontinued Operations		525,000
Reserve for Litigation - Current Operations		15,000
Total	$	1,260,567

Note 1-Summary of Significant Policies

Supplemental Response 2.  We have reevaluated our Response 7 to your Comment 7 from your Review Letter dated October 19, 2005 in light of ARB 43, Chapter 4, which defines Inventories, determined that certain indirect costs and expenses originally included in our SG&A should be included in our cost of sales, and these costs, as well as other costs that we previously reclassified pursuant to your guidance relating to direct labor expenses relating to receiving, purchasing and inspection and shipping and handling costs, should be included in the valuation of our inventories. Our proposed revisions resulting from the inventory revaluation are presented below.

Proposed Revision 2A

Note 1. Summary of Significant Accounting Policies - continued.

Cost of Sales and Selling, General and Administrative Costs

The Coatings, Sealants and Other Products line item includes all those costs directly associated with the manufacturing of the finished goods for sale and the costs associated with purchasing finished goods for resale, the cost of raw and other materials to make the finished goods, payroll costs associated with manufacturing the finished goods, as well as inbound freight and sales tax expense incurred when receiving materials or finished goods into warehouses. The Warranty Costs, Freight and Other Cost of Sales includes items such as paint and sealant containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, internal transfer and any other costs related to our distribution network, and warehousing costs. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. See also Note 21.

3

Proposed Revision 2B

Note 4. Inventories.

The following is a summary of inventories for the years ending December 31:

	2004		2003
Raw Materials	$	65,920	$	—
Finished Goods		202,074		141,677
Total	$	267,995	$	141,677

Proposed Revision 2C

“Note 19. Selected Quarterly Financial Data (Unaudited) - continued.

(B)     Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - After the reclassification described in paragraph (A) above, the Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in the Selling, General and Administrative line item and included these amounts in the Cost of Sales line item for 2004 and 2003. The aggregate quarterly financial data of the Company was not affected by the reclassification. For 2004, the reclassification affected Gross Profit which decreased $14,649 for March 31, $28,155 for June 30, $33,137 for September 30, and $45,780 for December 31. For 2003, the reclassification affected Gross Profit which decreased $17,375 for March 31, $11,218 for June 30, $25,416 for September 30, and $20,877 for December 31.

(D)     Restatement of Inventory and Cost of Sales- After the reclassifications described in paragraph (A) and (B) and restatement in paragraph (C) above, the Company restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations, retroactively for 2004 and 2003. The aggregate quarterly financial data of the Company was affected by the restatement. For 2004, the restatement affected Gross Profit, Operating Loss and Net Loss which each decreased $8,546 for March 31, $3,587 for June 30, $8,204 for September 30 and $804 for December 31. For 2003, the restatement affected Gross Profit, Operating Loss and Net Loss which each decreased $5,369 for March 31 and $2,192 for June 30, and increased $9,491 for September 30 and $19,842 for December 31; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, increased $.001 for December 31. No income tax effects were related to this restatement. To illustrate:

For 2004:	3/31/2004			6/30/2004			9/30/2004			12/31/2004
Net Loss (As Restated per (C))	$	(1,715,583	)	$	(1,532,124	)	$	(2,265,914	)	$	(276,028	)
Adjustments		8,546			3,587			8,204			804
As Adjusted and Restated	$	(1,707,037	)	$	(1,528,537	)	$	(2,257,710	)	$	(275,224	)

For 2003:	3/31/2003			6/30/2003			9/30/2003			12/31/2003
Net Loss (As Restated per (C))	$	(2,164,942	)	$	(3,712,429	)	$	(1,774,745	)	$	(3,510,088	)
Adjustments		5,369			2,192			(9,491	)		(19,842	)
As Adjusted and Restated	$	(2,159,573	)	$	(3,710,237	)	$	(1,784,236	)	$	(3,529,930	)”

Proposed Revision 2D

“Note 21.Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements.

(B)Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Consolidated Statements of Operations with respect to the manner in which other similarly situated public companies, like LaPolla, record certain direct labor expenses, shipping and handling costs, and warehousing costs and determined that certain reclassifications were required to make the Company’s Consolidated Statements of Operations comparable to other similarly situated public companies. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in the Selling, General and Administrative line item on the Consolidated Statements of Operations and included these amounts in the Cost of Sales line item, for the periods presented.

(D)Restatement of Inventory and Cost of Sales- The Company reevaluated the consolidated financial statements and related notes with respect to the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications described in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations for the periods presented. To illustrate:

	2004			2003			2002
Net Loss (As Restated per (C))	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)
Adjustments		21,141			(21,772	)		(73,946	)
As Adjusted and Restated	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)”

4

Proposed Revision 2E

“Item 6. Selected Financial Data

(B)     Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - After the reclassification described in paragraph (A) above, the Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in Selling, General and Administrative and included these amounts in Cost of Sales for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was not affected by the reclassification. Cost of Sales increased $121,722 for 2004, $74,886 for 2003, $87,207 for 2002, and $39,248 for 2001; and Selling, General and Administrative decreased $121,722 for 2004, $74,886 for 2003, $87,207 for 2002, and $39,248 for 2001.

(D)     Restatement of Inventory and Cost of Sales- After the reclassifications described in paragraph (A) and (B) and restatement in paragraph (C) above, the Company restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations, retroactively for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was affected by the restatement. Inventory and Total Assets increased $18,956 for 2004, decreased $2,185 for 2003, increased $19,587 for 2002, and $93,533 for 2001; and Cost of Sales, Operating Loss, and Net Loss each decreased $21,141 for 2004, increased $21,772 for 2003 and $73,946 for 2002, and decreased $93,533 for 2001. The restatement affected Net (Loss) Per Share - Basic and Diluted for Continuing Operations which increased $.001 for 2003 and $.005 for 2002, and decreased $.008 for 2001. No income tax effects were related to this restatement. To illustrate:

	2004			2003			2002			2001
Net Loss (As Restated per (C))	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)	$	(7,919,327	)
Adjustments		21,141			(21,772	)		(73,946	)		93,533
As Adjusted and Restated	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)	$	(7,825,794	)”

We are prepared to file our proposed amended Form 10-K/A-2 for December 31, 2004 (Exhibit 1), Form 8-K/A-2 dated February 11, 2005 (Exhibit 2), Form 10-Q/A for March 31, 2005 (Exhibit 3), Form 10-Q/A for June 30, 2005 (Exhibit 4), and Form 10-Q/A for September 30, 2005 (Exhibit 5), whenever you have completed your review of same. We also note that whatever instruction you may give will not serve as your approval or disapproval of our amended disclosures.

Again, we wish to reiterate our appreciation for the valuable interpretive guidance we continue to receive from Mr. Jeffrey Gordon, Staff Accountant, with respect to our responses, without which we would not have been able to respond as appropriately to your comments.

If you have any questions or concerns or wish to discuss any of the matters addressed herein or require clarification on anything whatsoever in whatever regard relating to this matter, please do not hesitate to contact me at your convenience.

Very truly yours,

LAPOLLA INDUSTRIES, INC.

/s/  Michael T. Adams, CEO

Michael T. Adams

CEO

MTA/

Enclosure

5

Exhibit 1

Revised Proposed Amended Form 10-K/A-2 for December 31, 2004

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A-2

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Fiscal Year Ended December 31, 2004

Commission File No. 001-31354

LaPolla Industries, Inc.

(formerly known as IFT Corporation)

(Exact name of Registrant as Specified in its Charter)

Delaware (State of Incorporation)	13-3545304 (I.R.S. Employer Identification No.)
Intercontinental Business Park 15402 Vantage Parkway East, Suite 322 Houston, Texas (Address of Principal Executive Offices)	77032 (Zip Code)

(281) 219-4700

(Registrant’s Telephone Number)

Securities registered pursuant to Section 12 (b) of the Act:

Title of Each Class	Name of Exchange on which Registered
Common Stock, $0.01 par value	American Stock Exchange

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

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, and (2) has been subject to such filing requirements for the past 90 days. Yes  þ   No   ¨

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

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

The aggregate market value of the registrant’s common equity held by non-affiliates was approximately $12,115,585 on June 30, 2004, based upon the closing price on the American Stock Exchange on such date.

Common Stock outstanding as of March 22, 2005 — 50,196,219 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ITEMS AMENDED HEREBY

As used in this amended report, "LaPolla" and the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc. ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The information presented herein reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. located in Arizona that was acquired on February 11, 2005 and merged into IFT Corporation as described above. Please find below a description of the items amended hereby:

(A)Reclassification of Continuing and Discontinued Operations - The Company reevaluated the consolidated financial statements and related notes as originally presented and filed with the Securities and Exchange Commission (“SEC”) based on guidance received from the SEC regarding the manner in which the continuing and discontinued operations were originally presented and determined that certain reclassifications were required to make the presentation conform to applicable accounting principles. The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The Infiniti Subsidiary was acquired effective September 1, 2001. The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to our discontinued operations for the periods presented from our continuing operations. The aggregate financial data originally presented was not affected by the reclassification. The Company reclassified the financial data for all periods presented.

(B)Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Consolidated Statements of Operations as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which other similarly situated public companies, like LaPolla, record certain direct labor expenses, shipping and handling costs, and warehousing costs, and determined that certain reclassifications were required to make the Company’s Consolidated Statements of Operations comparable to other similarly situated public companies. The Company recorded certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs, and warehousing costs as Selling, General and Administrative for the years 2001 through 2004. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for all applicable periods presented.

(C)Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company reevaluated the consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the allowance for doubtful accounts was calculated and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. As described in paragraph (A) above, the Company discontinued certain operations, one of which was its wholly-owned subsidiary RSM Technologies, Inc. (“RSM Subsidiary”), on November 5, 2004. The RSM Subsidiary’s operations related to the former RSM Products, which products were initially distributed through the Infiniti Subsidiary. The Infiniti Subsidiary also distributed its own Infiniti Products. The Infiniti Subsidiary’s accounting policy with respect to the method and percentages used to determine the valuation allowance for uncollectible receivables was based primarily on the historical data relating to bad debts of the former RSM products. The Company, after reclassifying the financial data relating to the discontinued operations from the continuing operations as described in paragraph (A), reevaluated the historical data relating to bad debts for the Infiniti Products and determined a change in method and percentages used to calculate the valuation allowance for uncollectible receivables was required. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company changed the method from the aging method to the percentage-of-sales method and adjusted the percentage used to match the historical data relating to bad debts and credit sales of the Infiniti Products. The Company restated the allowance for doubtful accounts on the Consolidated Balance Sheets and Bad Debt expense included in the Selling, General and Administrative line item on the Consolidated Statements of Operations for all applicable periods presented.

(D)Restatement of Inventory and Cost of Sales- The Company reevaluated the consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC in paragraph (B) above and Accounting Research Bulletin 43, Chapter 4, regarding the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications described in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations for all applicable periods presented.

(E)Loss Per Share and Dividends on Preferred Stock- The Company reevaluated the Consolidated Statement of Operations as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the Loss Per Share amounts were originally presented and determined that a change in the presentation was required to make the presentation conform to applicable accounting principles. The Company did not include the Dividends on Preferred Stock amounts on the face of the Consolidated Statement of Operations when these amounts should have been included in the presentation. The Company added the Dividends on Preferred Stock amounts for all applicable periods presented.

(E)Reclassification of Related Party Payable - The Company reevaluated the Consolidated Balance Sheets as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the Loans Payable - Related Party amounts were originally presented and determined that a reclassification was required to make the presentation conform to applicable accounting principles. The Company classified the Loans Payable - Related Party amounts on the face of the Consolidated Balance Sheets in the Other Liabilities section when these amounts should have been classified in the Current Liabilities section. The aggregate amounts of the Loans Payable - Related Party were not affected by the reclassification. The Company reclassified the Loans Payable - Related Party amounts on the face of the Consolidated Balance Sheets for all applicable periods presented.

The Company has fully updated all affected portions of this amended report, including the consolidated financial statements and related notes, MD&A, selected financial data, and quarterly financial data, to reflect the reclassifications, restatement and changes described above. In addition, certain scrivener’s errors and captions in the consolidated financial statements and related notes and disclosures have been updated throughout this amended report to make the presentation more useful, informative, and comparative.

A-2-1

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

FORM 10-K/A-2

FOR THE YEAR ENDED DECEMBER 31, 2004

INDEX

	Page
PART I
Item 1.  Business	A-2-3
Item 2.  Properties	A-2-5
Item 3.  Legal Proceedings	A-2-6
Item 4.  Submission of Matters to a Vote of Security Holders	A-2-6
PART II
Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	A-2-6
Item 6.  Selected Financial Data	A-2-8
Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	A-2-9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	A-2-11
Item 8.  Financial Statements and Supplementary Data	A-2-11
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	A-2-11
Item 9A.  Controls and Procedures	A-2-11
Item 9B.  Other Information	A-2-11
PART III
Item 10.  Directors and Executive Officers	A-2-12
Item 11.  Executive Compensation	A-2-13
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	A-2-17
Item 13.  Certain Relationships and Related Transactions	A-2-18
Item 14.  Principal Accounting Fees and Services	A-2-19
PART IV
Item 15.  Exhibits and Financial Statement Schedules	A-2-20
SIGNATURES	A-2-21
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	A-2-22
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS	A-2-23
INDEX OF EXHIBITS	A-2-24

A-2-2

PART I

Item 1. Business.

Overview

LaPolla Industries, Inc. (f/k/a IFT Corporation) (the “Company”) is a holding company focused on acquiring and developing companies that operate in the coatings, paints, foams, sealants, and adhesives markets. We have two wholly-owned subsidiaries, Infiniti Products, Inc. (“Infiniti Subsidiary”) and LaPolla Industries, Inc. (“LaPolla Subsidiary”).

Our Infiniti Subsidiary markets, sells, manufactures and distributes acrylic roof coatings, roof paints, sealers, and roofing adhesives to the home improvement retail and polyurethane foam systems to the industrial/commercial construction industries (“Infiniti Products”). During the latter part of 2004, our Infiniti Subsidiary built and is operating a manufacturing plant in the Southeastern United States to decrease its reliance on outside toll blenders and increase its product margin mix.

During the first quarter of 2005, we engaged a proven sales and marketing team, and made our first acquisition to support our strategic growth plan. On February 11, 2005, we closed our acquisition of the LaPolla Subsidiary, a manufacturer of acrylic roof coatings and sealers, and provider of polyurethane foam systems to the industrial/commercial construction industries (“LaPolla Products”). The acquisition broadened our customer base and established us as a leader in the roof coatings industry.

Since 1977, the LaPolla Subsidiary has provided quality products and roofing solutions to contractors, building owners and design professionals in the Southwestern United States. The LaPolla Subsidiary's primary customers are industrial/commercial roofing contractors. Under the terms of the agreement, we acquired the LaPolla Subsidiary for cash and restricted common stock. The transaction was funded through borrowings from our Chairman of the Board, Richard J. Kurtz. The LaPolla Subsidiary's trailing twelve months revenue ended January 31, 2005 was approximately $8 Million.

Our Internet website address is http://www.lapollaindustries.com. We make our periodic and current reports, together with amendments to these reports, available on our website, free of charge, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission. The information on our Internet website is not incorporated by reference in this amended Annual Report on Form 10-K.

On November 5, 2004, pursuant to resolution of the Board of Directors, we discontinued the operations of our RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). Our consolidated financial statements and related notes have been recast to reflect the financial position, results of operations and cash flows of our RSM Subsidiary as a discontinued operation.See Historical Information below.

Sales and Marketing

We maintain a regional sales and marketing team with a primary focus across the Southern United States as this portion of the country offers the greatest initial sales impact for our products. We are also pursuing international sales opportunities in the United States Virgin Islands, the Caribbean Islands, and Mexico. Our sales focus is on architectural coatings for the building market, channeled into both industrial / commercial markets and retail markets. For the industrial markets, our LaPolla Subsidiary and Infiniti Subsidiary will utilize direct sales, independent manufacturer representatives and stocking distributors who will be strategically positioned on a state or regional basis. Additionally, we will utilize public bonded warehouses as strategically needed to service our customers. Independent representatives, distributors and public warehouses are a low cost and an effective means of creating better access and convenience for our customers and future prospects. In our retail segment, our Infiniti Subsidiary will sell unique brand labels through national home improvement chains. The acrylic market is growing aggressively through enhanced consumer awareness due to nationally promoted programs from municipal and other government agencies and private organizations. These programs include Cool Roof Rating Programs, Energy Star and state and utility company funded rebates to energy conscious building owners for following very specific recommendations, using reflectivity and emmissivity as the general goal in reducing the environmental or “heat island effect”. See also Competition below. We place a high priority on forecasting our material demand and sales trending to create efficiency and expediency to our customers. Our LaPolla Subsidiary and Infiniti Subsidiary will utilize input from sales, our customer base, management experience and historical sales trending to predict needed supply for stock and warehousing to meet the needs of our customers on a timely basis. Public warehousing, distribution and direct sales will allow us to supply our customers in a timely and efficient fashion. Standard terms are net 30 days, but will not often exceed 60 days. The analysis of material costs with overhead and margins are effectively factored into sales budgeting to assure that the potential duration of receivables are not detrimental to margins. The combined volumes of the LaPolla Subsidiary and Infiniti Subsidiary are disbursed throughout a broad customer base. This broad base assures lack of vulnerability to the loss of one key customer. Although sales plans include the addition of new and individually significant volume customers, none today represent a significant adverse effect through such a loss.

New Product Developments

We will be adding new lines of related coating products that may be toll blended and/or private labeled. This will allow us to broaden sales targets geographically and increase the customer base to a national level by offering a variety of coating chemistry such as Silicone and Urethane coatings. Adding non-water based coatings to our current acrylic lines will give us the ability to target areas of the United States that may have been more restrictive due to seasonal conditions. See Seasonality below. Outside vendor agreements have been made to supply such product lines to us. Manufacturers of said products are very credible and of the highest recognition within the industry. Marketing materials and complete sales programs will be assembled and ready to implement in the second quarter of 2005.

Manufacturing

The majority of our products are manufactured in our own facilities located in Florida and Arizona. We maintain sufficient manufacturing capacity at these facilities to support our current forecasted demand as well as a modest safety margin of additional capacity to meet peaks of demand and sales growth in excess of our current expectations. We increase our capacity as required in anticipation of future sales increases. In the event of a very large or very rapid unforeseen increase in market demand for a specific product or supply of that product, our operations could be negatively impacted until additional capacity is brought on line. Third parties make a small number of commercial products for us. However, the revenues from these products are not material to our operating results.

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Raw Materials

The primary materials and/or basic chemistry being sold by our LaPolla Subsidiary and Infiniti Subsidiary are acrylic resin and additional components for the manufacturing of acrylic coatings and other acrylic based products, polyurethane foam, and silicone coatings. The suppliers of the necessary raw materials and finished goods to both our LaPolla Subsidiary and Infiniti Subsidiary are industry leaders in both the specific chemistries and basic in the manufacturing of the raw materials for supply. We maintain strong relationships and have commitments for continuing supply through times of shortage. A lengthy interruption of the supply of one of these materials could adversely affect our ability to manufacture and supply commercial product. Currently, there are potential industry shortages of acrylic resins and isocyanates (which is 50% of the spray polyurethane foam chemistry). The respective suppliers of each product have made commitments to assure all of the needed material even in the event of significant growth by our LaPolla Subsidiary and Infiniti Subsidiary in 2005. With our combined volume potential, we are potentially a lucrative target for vendors to assure their own growth and demand in 2005. Should there be a shortage of either material, there are multiple alternative suppliers that are basic in all of the needed materials.

Patents and Trademarks

We rely on many patents and proprietary technologies that are owned or controlled by our raw material suppliers for finished goods formulations. These formulations are available to our LaPolla Subsidiary and Infiniti Subsidiary, as a significant buyer of chemicals, as well as extensive and personalized technical support and guidance. We have the technical skill and ability to further make proprietary these formulations in an effort to out perform other competitive products. If we are unable to maintain access and use of these technologies, or if these technologies are eliminated or available on commercially unreasonable terms, our ability to continue commercially selling these product formulations incorporating such technology, our operations may be adversely affected. See Raw Materialsabove. We also rely on trade secrets and proprietary know-how that we seek to protect, in part, through confidentiality agreements with our partners, customers, employees and consultants. It is possible that these agreements will be breached or will not be enforceable in every instance, and that we will not have adequate remedies for any such breach. It is also possible that our trade secrets will otherwise become known or independently developed by competitors. We may find it necessary to initiate litigation to protect our trade secrets or know-how or to determine the scope and validity of the proprietary rights of others. Litigation involving trademarks and proprietary technologies can often be protracted and expensive and, as with litigation generally, the outcome is inherently uncertain. We market our products under various trademarks, for which we have unregistered trademark protection in the United States. These trademarks are considered to be valuable because of their contribution to the market identification of our products.

Competition

The United States adhesives, sealants and coatings industry is highly fragmented with over 500 manufacturing companies. We face strong competition in the markets in which we compete. These competitors have equivalent or, in most cases, greater availability to resources than we do. This enables them, among other things, to spread their research and development costs, as well as their marketing and promotion costs, over a broader revenue base. Our LaPolla Subsidiary and Infiniti Subsidiary will aggressively pursue two markets, industrial/commercial and retail. The industrial/commercial markets include professional, commercial applicators and contractors. This market has many competitors, most of which are regionally located and market focused. Product chemistry and performance can be similar. Product credentials and approvals will significantly differentiate product lines and suppliers that are more readily suited to broad use and industry acceptance. Both our LaPolla Subsidiary and Infiniti Subsidiary have a focus on such approvals and are currently listed with certain credentials and approvals to assure that there is no restriction in markets and uses. There will be a significant push throughout 2005 to raise the industry awareness of our LaPolla Products and Infiniti Products, in this market. Advertising campaigns, articles in industry periodicals, trade show exposure, public relations, printed case studies, internet and website exposure, mailers and direct sales and marketing will be used to make an aggressive move toward product line branding and recognition in 2005. Within the industry, as manufacturers specifically focused on acrylic coatings for construction as their primary line, the combined entities of our LaPolla Subsidiary and Infiniti Subsidiary are likely within the top ten in volume of possibly 100 manufacturers or more. The principle method of competition in the industrial/commercial markets is a combination of product credentials and approvals, price structure, availability, warranty availability to building owners, and product performance. Our LaPolla Subsidiary and Infiniti Subsidiary will grow through internal and external efforts including, but not limited to, aggressive sales and marketing, competitive pricing, material availability, a strong sales force by both employee and independent representatives, establishing new relationships with new channels of distribution, building owner and contractor brand awareness, and acquisitions. It is our intention to aggressively seek acquisition of competitors with regard to timing, proximity, complementary market position, and focus. The retail market also has many competitors, some of which are regionally located and market focused, such as roofing supply houses. Others include major national home improvement chains. Product chemistry and performance can be similar. Product credentials and approvals will play less of a role in differentiating product lines. Fundamental approval, such as a UL rating (Underwriters Laboratories), is sufficient for sales into this segment. Our LaPolla Subsidiary and Infiniti Subsidiary have made progress in moving ahead strongly into this segment, primarily into the national home improvement chains. A significant marketing platform is being developed to include retail oriented literature and countertop displays. Our Infiniti Subsidiary, in particular, has added sales staff to grow our existing business in this segment. Neither of our subsidiaries are a nationally recognized or significant regional entities in this market at this time. The principle method of competing successfully in this market is effective marketing, price structure, and product performance. Growth in this market from existing relationships and new opportunities is expected during the 2005 fiscal year. Continued focus on bringing new marketing tools, sales support and industry relationships will be a primary focus for our LaPolla Subsidiary and Infiniti Subsidiary. New and existing independent representative relationships are being sought and are expected to be established by the end of the second quarter. These representatives will bring existing relationships to our LaPolla Subsidiary and Infiniti Subsidiary with the national home improvement channels to further enhance our growth in this market.

Employees

At December 31, 2004, we employed 15 individuals. None of our employees are currently represented by a union. We believe that our relations with our employees are generally very good.

Environmental Matters

We are subject to federal, state, local and foreign environmental laws and regulations. We believe that our operations comply in all material respects with applicable environmental laws and regulations where we have a business presence. We do not anticipate any significant expenditure in order to comply with environmental laws and regulations that would have a material impact on our Company. We are not aware of any pending litigation or significant financial obligations arising from current or past environmental practices that are likely to have a material adverse effect on our financial position. We cannot assure you, however, that environmental problems relating to properties operated by us will not develop in the future, and we cannot predict whether any such problems, if they were to develop, could require significant expenditures on our part. In addition, we are unable to predict what legislation or regulations may be adopted or enacted in the future with respect to environmental protection and waste disposal.

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Seasonality

Our business, taken as a whole, is materially affected by seasonal factors at this time. Specifically, sales of our products tend to be lowest during the first and fourth fiscal quarters, with sales during the second and third fiscal quarters being comparable and marginally higher than sales during the first and fourth fiscal quarters. Although the Acrylic Coatings Line applications are restricted by cold temperature, below 50 degrees Fahrenheit, most of our current focus is in the Southern United States. Much of this territory will remain suitable for application throughout most of the year. Increased levels and geography of rain fall will impede sales, but can also produce a pent up demand that can be realized in the subsequent short term. By broadening our product lines to those that are less sensitive to temperature during application, we increase the likelihood of less seasonal downward sales trending during the winter months.

Historical Information

We were incorporated in the state of Delaware on October 20, 1989 as Natural Child Collection, Inc. and changed our name to Natural Child Care, Inc., on January 14, 1991. In 1993, we discontinued our Natural Child Care operations, changed our name to Winners All International, Inc., and began random lottery operations. We were operationally inactive from August 1, 1995 to January 26, 1997 and on January 29, 1997 abandoned our former random lottery operations, effective for year ended July 31, 1995. On January 28, 1997, we acquired Perma Seal International, Inc. and began our development-stage operations largely characterized as research and development for what later became known as our application system, coatings and sealants operations in 2001. We changed Perma Seal International, Inc.’s name to Urecoats International, Inc. in October 1997. We changed our name from Winners All International, Inc. to Urecoats Industries Inc. on February 8, 1999. In July 1999, we established Urecoats Technologies, Inc. to assist in application system, coatings and sealants research and development. Rainguard Roofing Corporation, a Florida corporation, was acquired, effective January 1, 2001, to field test our RSM Series™ products and generate revenues in the roof contracting business. In June 2001, upon completion of our commercial RSM Series™ spray application system, ultimately named the BlueMAX™, Model 230, we essentially divested our research and development entities, Urecoats International, Inc. and Urecoats Technologies, Inc. Urecoats Manufacturing, Inc., established in June 2001, began sales and marketing of our RSM Series™ products direct to contractors, during the fourth quarter of 2001. We acquired Infiniti Paint Co., Inc., effective September 1, 2001, to use as a footprint for developing a specialty distribution channel for the initial distribution of our former RSM Series™ products but also to diversify our overall product offerings. Shortly after we opened a second Infiniti location in Orlando, Florida, we located a regional distribution chain with over 96 locations at the time which would carry our former RSM Series™ products on an exclusive basis and the expansion of Infiniti ceased, to preserve our cash flow and other resources, and the Orlando location was shut down. The operations of Rainguard Roofing Corporation were discontinued, effective December 31, 2001 to eliminate competition with our former RSM Series™ products customers. On February 1, 2004, we changed the name of Urecoats Manufacturing, Inc. to RSM Technologies, Inc. to align the corporation’s name with the character of its RSM Series™ business. We changed the name of Infiniti Paint Co., Inc. to Infiniti Products, Inc. on February 8, 2002 to eliminate the limiting public perception about the character of its business only being related to paints. We discovered a latent defect in the RSM Series™, BlueMAX™ spray application system, which, in addition to mitigating current and future adverse financial impacts of continuing to operate RSM Technologies, Inc., caused us to discontinue the operations of RSM Technologies, Inc., effective November 5, 2004.

Forward Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express our opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of our control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by us about our businesses including, without limitation, the risk factors discussed below. Although we believe our expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause our or our industry's actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause our financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: (a) Financial position and results of operations, including general and administrative expense targets and effects on income from continuing operations; (b) Cash position and cash requirements, including the sufficiency of our cash requirements for the next twelve months; (c) Sales and margins; (d) Sources, amounts, and concentration of revenue; (e) Costs and expenses; (f) Accounting estimates, including treatment of goodwill and intangible assets, doubtful accounts, inventory, restructuring, and warranty, and product returns; (g) Operations, supply chain, quality control, and manufacturing supply, capacity, and facilities; (h) Products and services, price of products, product lines, and product and sales channel mix; (i) Relationship with customers, suppliers and strategic partners; (j) Raw material variations, substrate preparation, application specifications, operator techniques, and ambient weather fluctuations; (k) Acquisition and disposition activity; (l) Credit facility and ability to raise capital; (m) Real estate lease arrangements; (n) Global economic, social, and geopolitical conditions; (o) Industry trends and our response to these trends; (p) Tax position and audits; (q) Cost-reduction efforts, including workforce reductions, and the effect on employees; (r) Sources of competition; (s) Protection of intellectual property; (t) Outcome and effect of current and potential future litigation; (u) Research and development efforts; (v) Future lease obligations and other commitments and liabilities; (w) Common stock, including trading price; (x) Security of computer systems; and (y) Changes in accounting policies and practices, as may be adopted by regulatory agencies, and the Financial Accounting Standards Board. We do not plan to update any such forward-looking statements and expressly disclaim any duty to update the information contained in this report except as required by law.

Item 2. Properties

Our operations are conducted in leased facilities located in Florida, Texas, and Arizona. Our headquarters and primary administrative facilities are located in Florida, along with manufacturing, distribution and warehousing. We have an executive office in Texas for sales and marketing purposes. In Arizona, we have a facility for manufacturing, distribution and warehousing. Although we believe our present facilities are adequate for our current needs, we anticipate needing additional space for growth in manufacturing and distribution from an expected increase in sales in the near term.

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Item 3. Legal Proceedings

We hereby incorporate by reference:

(a) Joglar Painting, Inc., Plaintiff v. Urecoats Industries Inc., Urecoats Manufacturing, Inc, et. al., Defendants

The material features of this litigation have been previously disclosed in our Form 8-K dated August 20, 2004 (Section 8.  Other Events) filed on August 26, 2004 and Form 10-Q for the Quarter Ended September 30, 2004 (Item 3. Legal Proceedings) filed on November 22, 2004. Discovery has not yet commenced and no trial date is set.

(b) Plymouth Industries, Inc. vs. Urecoats Industries Inc,. Urecoats Manufacturing, Inc., et. al., Defendants

The material features of this litigation have been previously disclosed in our Form 8-K dated November 5, 2004 (Item 8.01 Other Events) filed on November 12, 2004, Form 10-Q for the Quarter Ended June 30, 2004 (Item 3. Legal Proceedings) filed on August 16, 2004, and Form 10-Q for the Quarter Ended September 30, 2004 (Item 3. Legal Proceedings) filed on November 22, 2004. On February 18, 2005, the Court granted a 45 day extension on Plaintiff’s second motion for summary judgment, which was scheduled for March 3, 2005. Mediation is scheduled for April 21, 2005.

(c) Raymond T. Hyer, Jr. and Sun Coatings, Inc., Plaintiffs v. Urecoats Industries Inc., et. al, Defendants

The material features of this litigation have been previously disclosed in our Form 10-K dated for the Year Ended December 31, 2004 (Item 3. Legal Proceedings) filed on March 12, 2004 and Form 10-K/A for the Year Ended December 31, 2004 (Item 3. Legal Proceedings) filed on April 28, 2004. Discovery has not yet commenced and no trial date is set.

Various Lawsuits and Claims Arising in the Ordinary Course of Business

We are involved in various lawsuits and claims arising in the ordinary course of business. These other matters are, in the opinion of the Company’s management, immaterial both individually and in the aggregate with respect to the Company’s consolidated financial position, liquidity or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

An Information Statement was provided to all of our stockholders to comply with the requirements of Section 14(c) of the Securities Exchange Act of 1934 and to provide information to all stockholders in connection with actions by written consent taken on December 2, 2004 by certain stockholders collectively owning 60% of our outstanding shares as of the record date of December 2, 2004. Such action constituted the approval and consent of stockholders representing a sufficient percentage of the total outstanding shares to approve the proposed amendments to the Article numbered “FIRST” of our Restated Certificate of Incorporation, to change the name of the corporation from Urecoats Industries Inc. to the IFT Corporation and Article and Section numbered “FOURTH” and “A” of our Restated Certificate of Incorporation, to increase the authorized common stock capitalization limit from 40 Million to 60 Million shares of Common Stock, Par Value $.01. Accordingly, the actions were not submitted to our other stockholders for a vote. The written consent became effective on December 28, 2004.

PART II

Item 5. Market for the Company’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information

The following table shows the quarterly price range of our common stock during the periods listed.

Calendar	2004				2003
Quarter	High		Low		High		Low
First	$	1.05	$	.43	$	1.05	$	.58
Second	$	2.00	$	.76	$	1.28	$	.67
Third	$	1.19	$	.47	$	1.15	$	.51
Fourth	$	.60	$	.22	$	.65	$	.30

Our common stock, listed on the American Stock Exchange, is currently trading under the symbol “LPA”. For the periods presented, our common stock traded under the symbol “IFT” from January 3, 2005 to November 10, 2005 and “URT” prior thereto.

As of March 18, 2005, there were approximately 4,170 holders of record of our common stock.

We did not declare any dividends during the past two years and do not anticipate declaring any common stock dividends in the near future.

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information with respect to our equity compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance on an aggregated basis as of December 31, 2004.

Equity Compensation Plan Information
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column (a)) (c)
Equity Compensation Plans Approved by Security Holders		115,321 (1)	$	3.16		1,097,443 (2)
Equity Compensation Plans Not Approved by Security Holders		70,000 (3)	$	3.36		16,000 (4)
Total		185,321	$	3.23		1,113,443

(1)	The equity compensation plans include:
	(i)	Key Employee Stock Option Plan. This plan was originally established as the 2000 Stock Purchase and Option Plan, which was approved by stockholders on June 20, 2000. The Board of Directors amended the 2000 Stock Purchase and Option Plan, effective December 31, 2004, changing its name to the Key Employee Stock Option Plan (“Key Employee Plan”), combining its terms and conditions with the 2002 Stock Option Plan (which was approved by stockholders on May 28, 2002), and eliminated consultants and directors from eligibility under the Key Employee Plan, for administrative convenience. Under the Key Employee Plan, either Incentive Stock Options or Non-Qualified Stock Options may be granted. Generally, the options may be exercised beginning one year from the date of grant and expire in two to five years. The Key Employee Plan provides for the grant of an aggregate of 825,000 options, which are exercisable for common stock. There were 406,450 options exercised, 115,321 options outstanding and 303,229 options available for grant under the Key Employee Plan as of December 31, 2004.
(2)	The equity compensation plans include:
	(i)	Key Employee Stock Option Plan. See Footnote (1)(i) above.
	(ii)	Director Compensation Plan. This plan was originally named the 2002 Non-Employee Director Restricted Stock Plan, which was approved by stockholders on May 28, 2002. The Board of Directors amended the 2002 Non-Employee Director Restricted Stock Plan, effective December 31, 2004, to among other things, change its name to the Director Compensation Plan (“Director Plan”). There were 652,767 shares of restricted common stock granted and issued (but not outstanding) and 141,447 shares remaining eligible for grant under the Director Plan as of December 31, 2004. Referto Director Compensation below for the material features of the Director Plan.
(3)	The equity compensation plans include:
	(i)	Non-Plan Options. The Company grants restricted options from time to time for special circumstances ("Non-Plan Options").  The Company did not grant any Non-Plan Options during 2004.  There were 50,000 Non-Plan Options exercised, 55,264 canceled/expired, and 70,000 outstanding as of December 31, 2004.
(4)	The equity compensation plan includes:
	(i)	Long Term Employment Agreement. This amount includes the shares of restricted common stock remaining under a prior long term employment agreement between us and our CEO, entered into on January 1, 2002, which automatically vests in increments of 4,000 shares at the end of each calendar quarter and ending at the end of the 2005 year. See also Item 13 - Certain Relationships and Related Transactions, Paragraph 11.

Recent Sales of Unregistered Securities

During the quarterly period ended December 31, 2004, we issued securities, for certain private transactions, in reliance on Section 4(2) of the Act, as described below:

1. We vested and released 5,036 of the 12,000 shares of restricted common stock automatically granted pursuant to the Director Compensation Plan (“Director Plan”), to a former director upon his election at our June 22, 2004 shareholders meeting that resigned on November 10, 2004. The remaining 6,964 shares were canceled immediately upon his resignation from the Board of Directors. We did not consider these shares outstanding due to a vesting provision in the Director Plan and as such no value was ascribed for these shares in the period during which they were granted. This transaction was valued and recorded at approximately $730.  

2. We issued 50,000 shares of restricted common stock pursuant to a partial exercise of a Non Plan restricted stock option through cancellation of indebtedness for marketing services, valued and recorded at $35,000.

3. We vested and released 6,286 of the 12,000 shares of restricted common stock automatically granted pursuant to the Director Plan, to a former director upon his election at our June 22, 2004 shareholders meeting that resigned on December 15, 2004. The remaining 5,714 shares were canceled immediately upon his resignation from the Board of Directors. We did not consider these shares outstanding due to a vesting provision in the Director Plan and as such no value was ascribed for these shares in the period during which they were granted. This transaction was valued and recorded at approximately $786.

4. We vested and released 6,464 of the 12,000 shares of restricted common stock automatically granted pursuant to the Director Plan, to a former director upon his election at our June 22, 2004 shareholders meeting that resigned on December 20, 2004. The remaining 5,536 shares were canceled immediately upon his resignation from the Board of Directors. We did not consider these shares outstanding due to a vesting provision in the Director Plan and as such no value was ascribed for these shares in the period during which they were granted. This transaction was valued and recorded at $808.

5. We issued 4,000 shares of restricted common stock to our CEO, as other compensation pursuant to his employment agreement, on December 31, 2004, which was valued and recorded at $540.

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6. We paid an aggregate of approximately $776,983 in dividends in the form of 2,877,714 shares of restricted common stock to the former holders of our Series B and C Preferred Stock on December 30, 2004. This amount of approximately $776,983 had been accrued prior to the automatic conversion of our Series B and C Preferred Stock on September 30, 2003 and January 1, 2004, respectively. The price per share used for such issuance was calculated based on the closing price of our common stock as traded on the American Stock Exchange on December 30, 2004 or $.27 per share. Richard J. Kurtz, the Chairman of the Board, was the sole owner of our Series B Preferred Stock, and accrued $213,497.28 in dividends related to same, which was satisfied by the issuance of a total 790,731 shares of restricted common stock. In addition, Mr. Kurtz accrued $260,959.70 in dividends related to the Series C Preferred Stock that he formerly owned, which was satisfied by the issuance a total of 966,517 shares of restricted common stock. Mark A. Reichenbaum, a former director who resigned on December 15, 2004, had accrued $128,931 in dividends related to the Series C Preferred Stock that he formerly owned, which was also satisfied by the issuance of 477,524 shares.

Item 6. Selected Financial Data

	Year Ended December 31, (A), (B), (C), (D), (E)
	2004			2003			2002			2001			2000
	Restated			Restated			Restated			Restated			Restated
Summary of Operations
Revenue	$	2,564,163		$	2,405,539		$	2,466,035		$	676,903		$	—
Cost of Sales		2,091,931			1,900,775			2,040,975			529,551			—
Selling, General and Administrative		1,980,170			3,087,915			4,112,966			3,017,342			1,383,270
Operating (Loss)		(2,627,175	)		(4,515,731	)		(5,001,579	)		(3,946,444	)		(2,021,444	)
(Loss) from Discontinued Operations		(3,141,333	)		(6,668,245	)		(5,818,870	)		(3,879,350	)		(2,499,910	)
Net (Loss)	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)	$	(7,825,794	)	$	(4,521,354	)
Plus: Dividends on Preferred Stock		—			(498,001	)		(259,634	)		(19,578	)		—
Net (Loss) Available to Common Stockholders	$	(5,768,508	)	$	(11,681,977	)	$	(11,080,083	)	$	(7,845,372	)	$	(4,521,354	)
Net (Loss) Per Share - Basic and Diluted:
Continuing Operations	$	(0.091	)	$	(0.328	)	$	(0.386	)	$	(0.343	)	$	(0.210	)
Discontinued Operations		(0.108	)		(0.436	)		(0.427	)		(0.336	)		(0.260	)
Financial Position
Long-Term Debt		38,825			—			15,500			61,267			18,000
Total Assets	$	2,143,694		$	1,691,544		$	2,721,968		$	3,018,827		$	47,201

We discontinued the operations of our RSM Subsidiary on November 5, 2004 and related RSM Products. The financial data above has been recast to reflect the results of operations for our continuing operations and, on an aggregated basis, discontinued operations, for these periods. See also Item 1 - Business, Historical Information, for more information on all of our discontinued operations aggregated above for the periods presented.

(A)Reclassification of Continuing and Discontinued Operations - The Company reclassified the financial data in the Selected Financial Data table above for continuing operations and, on an aggregated basis, discontinued operations, for all periods presented and corrected certain scrivener’s errors. The aggregate financial data of the Company was not affected by the reclassification. For Continuing Operations, the reclassification affected Revenue which decreased $544,497 for 2001; Cost of Sales increased $62,705 for 2002 and decreased $489,885 for 2001; Selling, General and Administrative increased $2 for 2004, decreased $145,131 for 2003, $1,439,688 for 2002, and $16,863 for 2001, and increased $114,829 for 2000; and Operating Loss decreased $18,568 for 2004, $200,746 for 2003, and $1,405,501 for 2002, increased $36,019 for 2001, and decreased $271,742 for 2000. For Discontinued Operations, the reclassification affected Loss from Discontinued Operations which increased $18,568 for 2004, $200,746 for 2003, and $1,405,501 for 2002, $1,085,785 for 2001, and $2,499,910 for 2000. The reclassification affected Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, decreased $.013 for 2003 and $.103 for 2002, increased $.003 for 2001 and decreased $.227 for 2000; and for Discontinued Operations, increased $.013 for 2003 and $.103 for 2002, decreased $.003 for 2001, and increased $.227 for 2000. Additionally, Long Term Debt increased $24,582 for 2004, decreased $52,349 for 2003, and increased $15,500 for 2002, $41,912 for 2001, and $18,000 for 2000, while Total Assets decreased $438 for 2004, $1,210,237 for 2003, increased $465,580 for 2002, and decreased $761,356 for 2001 and $2,484,909 for 2000. Working Capital (Deficit) and Total Stockholders’ Equity (Deficit) previously included are not required by the SEC and eliminated from the presentation.

(B)Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - After the reclassification described in paragraph (A) above, the Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in Selling, General and Administrative and included these amounts in Cost of Sales for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was not affected by the reclassification. Cost of Sales increased $121,722 for 2004, $74,886 for 2003, $87,207 for 2002, and $39,248 for 2001; and Selling, General and Administrative decreased $121,722 for 2004, $74,886 for 2003, $87,207 for 2002, and $39,248 for 2001.

(C)Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- After the reclassifications described in paragraph (A) and (B) above, the Company restated the Allowance for Doubtful Accounts provision originally included in the Consolidated Balance Sheets and related Bad Debt expense originally included in the Selling, General and Administrative line item, retroactively for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was affected by the restatement. Allowance for Doubtful Accounts decreased $61,518 for 2004, $204,770 for 2003, and $93,890 for 2002, and increased $3,342 for 2001; Selling, General and Administrative, Operating Loss, and Net Loss each increased $143,253 for 2004, and decreased $110,880 for 2003, $97,232 for 2002, and $3,342 for 2001; and Total Assets increased $61,518 for 2004, $204,770 for 2003, and $93,890 for 2002, and decreased $3,342 for 2001. The restatement affected Net (Loss) Per Share - Basic and Diluted for Continuing Operations which increased $.005 for 2004, and decreased $.007 for 2003 and 2002. No income tax effects were related to this restatement. To illustrate:

	2004			2003			2002			2001
Net Loss (As Previously Reported)	$	(5,646,396	)	$	(11,273,084	)	$	(10,843,735	)	$	(7,915,985	)
Adjustments		(143,253	)		110,880			97,232			(3,342	)
As Adjusted and Restated	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)	$	(7,919,327	)

A-2-8

(D)Restatement of Inventory and Cost of Sales- After the reclassifications described in paragraph (A) and (B) and restatement in paragraph (C) above, the Company restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations, retroactively for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was affected by the restatement. Inventory and Total Assets increased $18,956 for 2004, decreased $2,185 for 2003, increased $19,587 for 2002, and $93,533 for 2001; and Cost of Sales, Operating Loss, and Net Loss each decreased $21,141 for 2004, increased $21,772 for 2003 and $73,946 for 2002, and decreased $93,533 for 2001. The restatement affected Net (Loss) Per Share - Basic and Diluted for Continuing Operations which increased $.001 for 2003 and $.005 for 2002, and decreased $.008 for 2001. No income tax effects were related to this restatement. To illustrate:

	2004			2003			2002			2001
Net Loss (As Restated per (C))	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)	$	(7,919,327	)
Adjustments		21,141			(21,772	)		(73,946	)		93,533
As Adjusted and Restated	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)	$	(7,825,794	)

(E)Loss Per Share and Dividends on Preferred Stock- After the reclassifications and restatements described in paragraphs (A), (B), (C) and (D) above, the Company added the Dividends on Preferred Stock and Net Loss Available to Common Stockholders amounts to the presentation and included the recalculated Net (Loss) Per Share - Basic and Diluted amounts in the presentation. For Continuing Operations, the recalculation affected Net Loss Per Share - Basic and Diluted which increased $.034 for 2003 and $.024 for 2002, and decreased $.006 for 2001. There was no effect to discontinued operations.

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

Management's Discussion and Analysis

of Financial Condition and Results of Operations for the Three-Year Period Ended December 31, 2004

Overview

This financial review presents our operating results for each of the three years in the period ended December 31, 2004, and our financial condition at December 31, 2004. We discontinued the operations of our RSM Subsidiary on November 5, 2004 and related RSM Products. The financial data and information below has been recast to reflect the results of operations for our continuing operations and, on an aggregated basis, discontinued operations, for these periods. Except for the historical information contained herein, the following discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and specifically under the caption “Forward Looking Statements” in Item 1 of Part I of this report. In addition, the following review should be read in connection with the information presented in our consolidated financial statements and the related notes.

Results of Operations 

Revenue

The following is a summary of revenue for the years ending December 31:

	2004		2003		2002
Revenue:
Coatings, Sealants and Other Products	$	2,564,163	$	2,405,539	$	2,466,035
Total Revenue	$	2,564,163	$	2,405,539	$	2,466,035

We reported revenue for 2004 of $2,564,163 as compared to $2,405,539 for 2003. The revenue generated from sales of Coatings, Sealants and Other Products represents 100% of our revenue from our Infiniti Subsidiary. The increase of $158,624 from Coatings, Sealants and Other Products is a result of an increase in sales of our Infiniti Products. Our revenue for 2003 was $2,405,539 compared to $2,466,035 for 2002. The revenue generated from sales of our Coatings, Sealants and Other Products represents 100% of our revenue from our Infiniti Subsidiary. The decrease of $60,496 from Coatings, Sealants and Other Products is a result of a decrease in sales of our Infiniti Products.

Cost and Expenses

Our total cost and expenses are comprised of cost of sales, selling, general and administrative expenses, professional fees, depreciation and amortization, research and development, consulting fees, interest expense, impairment of assets, and loss on disposal of property, plant and equipment. These total costs and expenses decreased from $6,921,270 for 2003 to $5,191,338 for 2004 for a decrease of $1,729,932. This decrease is comprised of a reduction in selling, general and administrative expenses, professional fees, impairment of assets, and loss on disposal of property, plant and equipment, which were offset by an increase in the cost of sales, depreciation and amortization, consulting fees, and interest expense. From 2002 to 2003, total costs and expenses decreased from $7,467,614 to $6,921,270, respectively, for a decrease of $546,344. This decrease is comprised of a reduction in cost of sales, selling, general and administrative expenses, depreciation and amortization, research and development, consulting fees, which were offset by an increase in professional fees, interest expenses, impairment of assets, and loss on disposal of property, plant and equipment.

Cost of Sales: Our cost of sales increased $191,156 from $1,900,775 in 2003 to $2,091,931 in 2004. Our cost of sales for 2004 is comprised of $1,934,540 of direct product costs for Coatings, Sealants and Other Products, or 75.4% of related revenue, and $157,391 of warranty costs, freight and other costs of sales. This is compared to cost of sales for 2003 comprised of $1,753,685 of direct product costs for Coatings, Sealants and Other Products, or 72.9% of related revenue, and $147,090 of warranty costs, freight and other costs of sales. The increase of $191,156 in cost of sales, and increase of $158,624 in revenue resulted in a decrease of 2.6% in gross profit from 2003 to 2004. Cost of sales decreased $140,200 from $2,040,975 in 2002 to $1,900,775 in 2003. Our cost of sales for 2003 is comprised of $1,753,685 of direct product costs for Coatings, Sealants and Other Products, or 72.9% of related revenue, and $147,090 of warranty costs, freight and other cost of sales.  This is compared to cost of sales for 2002 comprised of $1,775,825 of direct product costs for Coatings, Sealant and Other Products, or 72% of related revenue, and $265,150 of warranty costs, freight and other costs of sales.  The decrease of $140,200 in cost of sales, and decrease of $60,496 in revenue resulted in an increase of 3.7% in gross profit from 2002 to 2003.

A-2-9

Selling, General and Administrative Expenses: Our selling, general and administrative expenses for 2003 were $3,087,915 as compared to $1,980,170 for 2004. The decrease of $1,107,745 is attributable to a strategic organizational initiative designed to reduce costs and expenses that commenced in 2003. The decrease is primarily due to a reduction in personnel and personnel related costs of $486,775, travel of $321,932, investor relations of $146,650, office expenses of $193,305 and other administrative expenses, partially offset by an increase in insurance of $38,595 and director fees of $80,047.Our selling, general and administrative expenses for 2002 were $4,112,966 compared to $3,087,915 for 2003. The decrease of $1,025,051 is attributable to the aforementioned strategic organizational initiative and primarily due to a reduction in personnel and personnel related costs of $581,751, insurance of $50,090, investor relations of $31,331, office expenses of $85,339 and other administrative expenses, partially offset by an increase in travel expenses of $61,279 and director fees of $149,707.

Professional Fees: Our professional fees decreased $254,529 from $672,218 in 2003 to $417,689 in 2004. This decrease is related to a reduction in legal fees of $180,246 relating to litigation, and a decrease of $74,283 in accounting and auditing fees. Professional fees increased $92,203 from $580,015 in 2002 to $672,218 in 2003. This increase related to additional legal fees of $138,667 relating to litigation, partially offset by a decrease of $46,464 in accounting and auditing fees.

Depreciation and Amortization: Our depreciation and amortization expense for 2003 was $47,962 compared to $83,002 for 2004 for an increase of $35,040. This increase is attributable to depreciation of property, plant and equipment, including additions made during the 2004 year. Depreciation and amortization expense for 2002 was $124,522 compared to $47,962 for 2003 for a decrease of $76,560, which is primarily attributable to a decrease in our depreciable assets from 2002 to 2003.

Research and Development: We did not incur any research and development costs in 2003 or 2004. Our research and development costs were $24,495 in 2002.

Consulting Fees: Our consulting fees in 2003 were $137,581 compared to $226,634 in 2004 for an increase of $89,053. This increase was attributable to additional outsourcing for outside professional services. Consulting fees in 2002 were $539,395 compared to $137,581 in 2003 for a decrease of $401,814. This decrease was attributable to a reduction in outside professional services as part of the overall cost reduction program that took place during 2003.

Interest Expense: Our interest expense increased $270,566 from $121,346 in 2003 to $391,912 in 2004. The increase is primarily due to short term loans received from the Chairman of the Board in the amount of $5,610,000 in 2004 to continue our operations. Other interest expense was attributable to interest on lines of credit and lease payments for vehicles. Interest expense increased $76,100 from $45,246 in 2002 to $121,346 in 2003. The increase is primarily due to short term loans received from the Chairman of the Board in the amount of $6,610,000 in 2003 to continue our operations. Other interest expense was attributable to interest on lines of credit and lease payments for vehicles.

Loss on Asset Impairment and Disposal of Property, Plant and Equipment: We had Goodwill relating to the acquisition of our Infiniti Subsidiary in 2001. Management evaluated the fair market value of this asset as required and determined that there was impairment at December 31, 2003. We consider relevant cash flow and profitability information, including estimated future operating results, trends, and other available information, in assessing whether the carrying value of the intangible assets can be recovered. As a result, a charge of $837,011 for the impairment of the asset was recorded and is reflected on the Consolidated Statement of Operations for 2003 leaving Goodwill at $774,000 at December 31, 2004. We also recognized a loss for obsolete and abandoned property, plant and equipment primarily in the form of leasehold improvements related to relocating our corporate offices in the amount of $116,462 during 2003. There was no asset impairment or loss on disposal of assets in 2002 or 2004.

Discontinued Operations: On November 5, 2004, we discontinued the operations of our RSM Subsidiary and related RSM Products, which consisted of two products lines: Application Systems and Coatings. Our consolidated financial statements and the related notes have been recast to reflect the financial position, results of operations and cash flows on an aggregated basis for our discontinued operations for the periods presented.

Selected Financial Data for Discontinued Operations

	Year Ended December 31,
	2004			2003			2002
Revenue	$	475,785		$	1,571,317		$	2,549,610
Gross Profit (Loss)		84,568			(1,034,813	)		315,903
Costs and Expenses		(3,617,118	)		(8,239,562	)		(8,368,480	)
(Loss) from Discontinued Operations	$	(3,141,333	)	$	(6,668,245	)	$	(5,818,870	)

During 2002, we evaluated all circumstances and determined that a period of five years had passed since any material communications were received relating to the commitments and contingencies reserve initially established in 1997 for certain discontinued operations.  Accordingly, we decided that the $600,622 commitments and contingency reserve for these discontinued operations was no longer required and reversed it. See also Item 6 - Selected Financial Data.

Liquidity and Capital Resources

We had $24,465 of cash on hand at December 31, 2004 reflecting a decrease of $10,920 when compared to the $35,385 of cash on hand at December 31, 2003. The cash on hand at December 31, 2002 was $44,011.

Historically, we have not generated cash from operations in excess of working capital requirements and have relied principally upon short term loans from the Chairman of the Board, as well as proceeds from the sale of preferred and common stock, to continue our operations. The net cash used in our operations was $5,312,995 in 2004 compared to $6,956,693 in 2003 and $9,475,081 in 2002. The cash used in operations for 2004 as compared to 2003 was attributable to our net loss for the year, including the effect of adjusting for non-cash items, offset by increases in accounts receivable, inventories, prepaid expenses and other current assets, deposits and other non current assets, and a reserve for litigation, and decreases in accounts payable and accrued expenses and other current liabilities. The cash used in operations for 2003 compared to 2002 was attributable to our net loss, including the effect of adjusting for non-cash items, offset by increases in accounts receivable, inventories, deposits and other non current assets, accounts payable, and accrued expenses and other current liabilities, and decreases in prepaid expenses and other current assets. For 2004, 2003 and 2002, the net cash for discontinued operations provided by operating activities was $876,765 and $2,463,981 and used in operating activities was $30,324, respectively.

Net cash used in investing activities was $182,645 in 2004 compared to $102,886 in 2003 and $886,594 in 2002. We invested $184,745 in new property, plant and equipment during 2004 compared to $-0- in 2003 and $429,031 in 2002. During 2004, the additions to property, plant and equipment included costs to establish Infiniti’s manufacturing plant in our Florida facilities. During 2002, the additions to property, plant and equipment included costs for leasehold improvements. Capital expenditures in 2004 also included costs for office furniture and equipment and vehicles and in 2002 costs for office furniture and equipment. Net cash used in investing activities includes $36,849, $-0- and $13,505 to acquire computer hardware and software in 2004, 2003 and 2002, respectively. For 2004, 2003 and 2002, the net cash for discontinued operations provided by investing activities was $2,100 and used in investing activities was $102,886 and $457,563, respectively.

A-2-10

Net cash provided by financing activities was $5,484,720 in 2004, composed primarily of $5,610,000 in proceeds of loans from our Chairman of the Board, while the net cash used in financing activities relates to repayments of long term debt, payments under a capital lease obligation and payments on a line of credit partially offset by proceeds from a line of credit. For 2003 and 2002, the net cash provided by financing activities was $7,050,953 and $9,980,751, respectively, composed primarily of $350,000 and $6,223,000, respectively, in proceeds from the sale of common and preferred stock and $6,610,000 and $3,875,000, respectively, in proceeds of loans from our Chairman of the Board, while the net cash used in financing activities relates to payments on a line of credit partially offset by proceeds from a line of credit. For 2004, 2003 and 2002, the net cash for discontinued operations used in financing activities was $39,707, provided by financing activities was $37,065, and used in financing activities was $86,631, respectively.

We are required to fund our continuing operations from the sale of common or preferred stock or borrowings. As we continue to increase our revenue, improve gross margins, and minimize selling, general, and administrative expenses, our need to rely on the funds to continue our operations from outside and related parties will diminish. However, at this time, if adequate funds are not available when needed, our business, operations, financial condition and future prospects will be materially adversely affected.  Although no formal commitment has been received from the Chairman of the Board to fund our operating requirements for the 2005 year, we have received for the period beginning as of January 1, 2005 through March 15, 2005, loans amounting to $2,950,000 from the Chairman of the Board. Out of those proceeds, $2,000,000 was used for the purchase of our LaPolla Subsidiary during the first quarter of 2005. All outstanding loan amounts from the Chairman of the Board bear interest at 9% per annum. Furthermore, we will be actively seeking to raise cash proceeds of at least $5,000,000 privately, on a best efforts basis, pursuant to a private placement offering during 2005, depending on market conditions. There can be no assurance as to the availability or terms upon which such capital might be available. Our ability to continue as a going concern is dependent on management’s successful execution of its business plan. See Part II, Item 8 - Financial Statements and Supplementary Data and Notes to Consolidated Financial Statements, Note 2 - Going-Concern Issues Arising from Recurring Losses and Cash Flow Problems, for more information.

Contractual Obligations

	Payments Due By Period
Contractual Obligations	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total
Long-Term Debt Obligations	$	24,582	$	14,243	$	—	$	—	$	38,825
Estimated Interest Payments on Long-Term Debt Obligations		1,221		687		—		—		1,908
Operating Lease Obligations		155,668		40,441		—		—		196,109
	$	181,471	$	55,371	$	—	$	—	$	236,842

The information provided in the table above relates to four vehicle leases and one equipment lease.

Indemnification

Our Restated Certificate of Incorporation, as amended, provides that we will indemnify, to the fullest extent permitted by the Delaware General Corporation Law, each person that is involved in or is, or is threatened to be, made a party to any action, suit or proceeding by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Company or was serving at our request as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise. We have purchased insurance policies covering personal injury, property damage and general liability intended to reduce our exposure for indemnification and to enable us to recover a portion of any future amounts paid.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

We do not issue or invest in financial instruments or their derivatives for trading or speculative purposes. Our operations are conducted presently in the United States, and, as such, we are not subject to foreign currency exchange risks. Although we have outstanding debt and related interest expense, market risk in interest rate exposure in the United States is currently not material to our operations.

Item 8. Financial Statements and Supplementary Data

The information required by this Item is incorporated herein by reference to the financial statements set forth in Item 15(a) of Part IV of this report.

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

None.

Item 9A. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Principal Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2004, the end of the annual period covered by this report. The evaluation of our disclosure controls and procedures included a review of the disclosure controls’ and procedures’ objectives, design, implementation and the effect of the controls and procedures on the information generated for use in this report. In the course of our evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm the appropriate corrective actions, including process improvements, were being undertaken. Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, as amended, our disclosure controls and procedures were not as effective as originally contemplated nor did such controls operate at a level appropriate to provide reasonable assurance. A material weakness existed. The material weakness identified originated with the period immediately following the Company’s discontinuance of the operations of its RSM Subsidiary on November 5, 2004. The CFO that was originally responsible for the preparation of the original report’s financial statements and related notes resigned on February 14, 2005 for title purposes and February 28, 2005 for employment purposes. A new CFO was retained on February 25, 2005. The new CFO reviewed and completed the worksheets relating to the evaluation of our disclosure controls and procedures. The CEO reviewed and approved the completed evaluation report. During this same timeframe, the Company made an acquisition. All of the changes in this report, as amended, requiring reclassifications, restatement, as well as other changes, pertain to knowledge and experience concerning the application of accounting principles. The material weakness as identified highlights the need to train accounting and executive personnel regarding the application of appropriate accounting principles for SEC reporting. The actions that the Company has taken to correct this material weakness include but are not limited to: (a) training of the CEO concerning the tools that are used to prepare and review financial statements and related disclosures and the application of certain accounting principles; (b) enhancement of the hiring practices of the Company to seek where practicable CFOs that have prior SEC reporting experience as a prerequisite for that position; (c) a training program has been initiated for all accounting personnel at various levels to facilitate accurate and punctual reporting; (d) the hiring of our current CFO with prior SEC reporting experience; and (e) an increase in the number of accounting related personnel as deemed required. The Company believes the material weakness identified above has been corrected. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.

A-2-11

Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, as amended, our disclosure controls and procedures were not as effective as originally contemplated nor did such controls operate at a level appropriate to provide reasonable assurance for certain matters. A material weakness existed. The material weakness identified originated with the period immediately following the Company’s discontinuance of the operations of its RSM Subsidiary on November 5, 2004. The CFO that was originally responsible for the preparation of the original report’s financial statements and related notes resigned on February 14, 2005 for title purposes and February 28, 2005 for employment purposes. A new CFO was retained on February 25, 2005. The new CFO reviewed and completed the worksheets relating to the evaluation of our disclosure controls and procedures. The CEO reviewed and approved the completed evaluation report. The Company also made an acquisition on February 11, 2005. All of the changes in this report, as amended, requiring reclassifications, restatements, as well as other changes, pertain to knowledge and experience concerning the application of certain accounting principles. The material weakness as identified highlights the need to train accounting and executive personnel regarding the application of appropriate accounting principles for SEC reporting and for succession. The actions that the Company has taken to correct this material weakness include but are not limited to: (a) training of the CEO concerning the tools that are used to prepare and review financial statements and related disclosures and the application of certain accounting principles; (b) enhancement of the hiring practices of the Company to seek where practicable CFOs that have prior SEC reporting experience as a prerequisite for that position; (c) a training program has been initiated for all accounting personnel at various levels to facilitate accurate and punctual reporting; (d) the hiring of our current CFO with prior SEC reporting experience; and (e) an increase in the number of accounting related personnel as deemed required. The Company believes the material weakness identified above has been corrected. There were no changes in our internal controls during the fourth quarter of 2004. There were significant changes in our internal controls or in other factors after the end of the fourth quarter of 2004 as described above. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.

Item 9B. Other Information

None.

PART III

Item 10. Directors and Executive Officers

Directors

Set forth below is the name and age of each nominee and each director of the Company whose term of office continues after the meeting, the principal occupation of each during the past five years, and the year each began serving as a director of the Company:

	Richard J. Kurtz	64	Director since November 23, 1998
	Chairman of the Board since February 8, 1999
	Mr. Richard J. Kurtz has been president and chief executive officer of the Kamson Corporation, a privately held corporation, for the past 27 years. The Kamson Corporation has its principal executive offices located in Englewood Cliffs, New Jersey and currently owns and operates eighty one (81) investment properties in the Northeastern U.S. Mr. Kurtz is a graduate of the University of Miami and a member of its President's Club. Mr. Kurtz is also a member of the Board of Directors of Paligent, Inc., a publicly traded company on the NASD O-T-C bulletin board. Most notably, the Chamber of Commerce in Englewood Cliffs and the Boy Scouts of America chose him Man of the Year. Mr. Kurtz resides in Alpine, New Jersey and is currently Vice President and a member of the Board of Directors for the Jewish Community Center on the Palisades in Tenafly, New Jersey. He is also proud to be an elected member of the Board of Trustees and the Foundation Board for the Englewood Hospital and Medical Center of New Jersey as well as a member of the Board of Governors for the Jewish Home and Rehabilitation Center.
	Lt. Gen. Arthur J. Gregg US Army (Ret.)	76	Director since February 21, 2000
	Lt. Gen. Arthur J. Gregg, US Army (Ret.) has more than fifty-five years of distinguished professional experience, having held senior level management and command positions in the military and several executive positions in industry. During his career, through ongoing education and the nature of the positions he has held, General Gregg has developed a broad, keen and in-depth knowledge of business operations and management. His record of performance repeatedly demonstrates the ability to lead organizations to success including new businesses and turn around situations. Also, as a result of his extensive military and executive experience, he has considerable contacts and respect within federal government agencies and private industry. General Gregg continues an active schedule as a member of several corporate and academic boards. He chairs three of these boards. His education includes Harvard University, John F. Kennedy School of Government Concentrated Executive Program in National Security; Saint Benedict College Atchison, Kansas, Bachelor of Science in Business Administration (Summa cum Laude); Army War College, Carlisle Barracks, Pennsylvania, One-year graduate level college; Command and General Staff College, Fort Leavenworth, Kansas, One-year graduate level college.
	Gilbert M. Cohen	73	Director since November 12, 2004
	Mr. Gilbert M. Cohen was the co-founder, chief financial officer, and treasurer of The Kamson Corporation from 1969 to 2001. From 1960 to 1969, he was the treasurer of the Bruck Group, Four Companies - Subsidiaries of American Hospital Supply Corporation, a former New York Stock Exchange listed corporation. Mr. Cohen retired in 2001 and, on a voluntary basis, is a baseball coach for the Cavallini School in Upper Saddle River for the public school system. His professional memberships include the American Institute of CPAs and New York State Society of CPAs. Mr. Cohen received his B.A. in 1953 and B.S. in 1956 from Brooklyn College.
	Michael T. Adams	39	Director since December 20, 2004
	Chief Executive Officer since January 28, 2005
	Mr. Michael T. Adams was the President from August 1, 2003 and Executive Vice President and Corporate Secretary from March 1, 1999. Prior thereto, Mr. Adams held various officer capacities in the Company’s subsidiaries and was instrumental in the restructuring and establishment of operations in January 1997. He earned his Bachelor of Science degree in Business Administration in 1989, Master of Science degree in Business Administration in 1990 and Juris Doctor Degree in 1995, from Nova Southeastern University, located in Fort Lauderdale, Florida.

Mr. Cohen is our “audit committee financial expert” as such term is defined in Item 401(h) of Regulation S-K promulgated by the SEC serving on the Audit Committee, which is composed entirely of independent outside directors.

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Executive Officers

A brief summary of our executive officers and their ages as of March 25, 2005 is as follows:

	Douglas J. Kramer	41	President and COO since January 28, 2005
	Mr. Douglas J. Kramer is the President and Chief Operating Officer since January 28, 2005. Prior thereto, Mr. Kramer was employed by Foam Enterprises, Inc., a wholly-owned subsidiary of the BASF Corporation, which manufactures polyurethane foam systems for the construction and OEM markets. He held various positions at Foam Enterprises during his more than 7 years of employment. Mr. Kramer began in 1997 as western regional sales manager and immediately prior to joining the Company, was vice president of construction products. Mr. Kramer attended and studied Liberal Arts at Penn State University, New Kensington, Pennsylvania from 1982 to 1983 and Austin Community College and University of Texas from 1983 to 1986 in Austin, Texas.
	Charles R. Weeks	37	CFO and Treasurer since February 25, 2005
	Mr. Charles R. Weeks is the Chief Financial Officer and Corporate Treasurer since February 25, 2005. Prior thereto, Mr. Weeks was the chief financial officer of Ad Management Systems, Inc. from September 2003 to January 2005; controller at Lodging.com from March 2002 to September 2003; and controller of Air Partner, PLC, a publicly listed company in England from November 2000 to January 2002. He graduated from Clemson University, Clemson, South Carolina, with a Bachelor of Science degree in Accounting in 1989. Mr. Weeks obtained his CPA certificate in Maryland, and is currently a member of both the MACPA and AICPA.

Dennis A. Dolnick, our former Chief Financial Officer and Corporate Treasurer, resigned, effective February 14, 2005 for title purposes and February 28, 2005 for employment purposes. Officers are appointed by and hold office at the pleasure of the Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and persons who own more than 10% of a registered class of our common stock or other equity securities, to file with the SEC certain reports of ownership and changes in ownership of our securities. Executive officers, directors and stockholders who hold more than 10% of our outstanding common stock are required by the SEC to furnish us with copies of all required forms filed under Section 16(a). We prepare Section 16(a) forms on behalf of our officers and directors based on the information provided by them. Based solely on review of the copies of such forms and representations from certain of the reporting persons that no other reports were required, we believe that, during the 2004 fiscal year, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were met.

Code of Business Conduct and Ethics

We adopted a Code of Business Ethics and Conduct applicable to all officers, directors and employees as defined by applicable rules of the SEC and the AMEX. This Code of Business Ethics and Conduct is publicly available on our website at http://lapollaindustries.com/pdf/codeofethics.pdf. If we make any amendments to this Code of Business Ethics and Conduct other than technical, administrative, or other non-substantive amendments, or grant any waivers from a provision of the code to any of our executive officers, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies on our website

Item 11. Executive Compensation

Summary of Cash and Certain Other Compensation

The following table provides information about the compensation for our last three calendar years of our Chief Executive Officer, plus our most highly compensated other executive officers as of the end of the 2004 calendar year. This group is referred to in this amended report as the Named Executive Officers.

Summary Compensation Table

									Long Term
			Annual Compensation						Compensation Awards
(a)	(b)		(c)		(d)		(e)		(f)		(g)		(i)
Name and Principal Position	Year		Salary ($)		Bonus ($)		Other Annual Compensation ($)(1)		Restricted Stock Award(s) ($)		Securities Underlying Options ($)(2)		All Other Compensation ($)
Michael T. Adams		2004		90,000		—		17,471		—		6,500		—
Chief Executive Officer		2003		93,375		—		22,213		—		6,500		—
		2002		105,000		—		42,457		—		6,500		—
Dennis A. Dolnick		2004		79,166		—		15,078		—		—		—
Former CFO and Treasurer		2003		—		—		—		—		—		—
(Resigned 2/28/05)		2002		—		—		—		—		—		—
John G. Barbar		2004		59,711		—		18,864		—		—		—
Former CFO, SVP and Treasurer		2003		113,625		—		24,616		—		5,000		—
(Terminated 3/31/04)		2002		135,000		—		51,544		—		5,000		—

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____________________

(1) For 2004, the amounts disclosed in this column consist of: (a) an aggregate of 25,000 shares of restricted common stock issued and valued in the aggregate at $10,174 to current and former executive officers, as other compensation, pursuant to written employment agreements, of which Mr. Adams and Mr. Barbar received 16,000 and 9,000 shares, respectively, valued at $5,764 and $4,410, respectively; and (b) an aggregate of $41,239 perquisites, of which Mr. Adams, Mr. Dolnick and Mr. Barbar received car allowances for $7,800, $5,700, and $1,950, respectively, and health/dental insurance for $3,907, $9,378, and $12,504, respectively.

(2) These amounts consist of vested incentive stock options. At the beginning of 2002, we granted incentive stock options to current and former executive officers (Mr. Adams - 26,000 options and Mr. Barbar - 20,000), under our Key Employee Stock Option Plan (f/k/a 2002 Stock Option Plan), covering a four year period pursuant to their written employment agreements, which vested upon the occurrence of certain events, of which an aggregate of 19,500 and 10,000 options have vested for Mr. Adams and Mr. Barbar, respectively. A total of 10,000 options were canceled upon the termination of Mr. Barbar, and 6,500 options remain unvested for Mr. Adams at the end of 2004.

(3) As of December 31, 2004, Mr. Adams held 146,983 shares of restricted common stock, respectively, valued at $39,685; and Mr. Barbar, as of the date of his termination on March 31, 2004 held 112,347 shares of restricted common stock, valued at $30,334.

Stock Options, Option Grants, Exercises and Holdings

The following tables show the number of stock options granted and shares covered by both exercisable and non-exercisable stock options for our current and former Named Executive Officers as of December 31, 2004. There were no stock option exercises or any “in-the-money” stock option values to report for any Named Executive Officers in fiscal 2004.

Option Grants in Last Fiscal Year

The following tables summarize the stock option activity for the Named Executive Officers during 2004.

Name	Number of Securities Underlying Options Granted (#) (1)		% of Total Options Granted to Employees In Fiscal 2004			Exercise or Base Price Per Share		Expiration Date
Dennis A. Dolnick (Resigned 2/14/05)		3,180		2	%	$	.95		3/16/2007

Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values

					Number of Securities				Value of Unexercised
					Underlying Unexercised				In-the-Money Options
	Shares				Options at 12/31/04 (#)				at 12/31/04 ($)
	Acquired on		Value
Name	Exercise (#)		Realized ($)		Exercisable		Unexercisable		Exercisable		Unexercisable
Michael T. Adams		—		—		19,500		6,500		—		—
Dennis A. Dolnick (Resigned 2/14/05)		—		—		3,180		—		—		—
John G. Barbar (Terminated 3/31/04)		—		—		10,000		—		—		—

Director Compensation

Each director who is not an employee is reimbursed for actual expenses incurred in attending our Board meetings. We have a non-employee director incentive plan which provides for the issuance of restricted common stock to non-employee directors for Board service fees and cash to eligible non-employee directors as retention fees. The Board of Directors amended the 2002 Non-Employee Director Restricted Stock Plan to include, in addition to automatic grants of restricted common stock, a retention fee, payable on a quarterly basis, of $10,000 per year, for non-employee directors who serve on the Board for more than three consecutive years. We also changed the name of the plan to the “Director Compensation Plan” for increased transparency (the “Director Plan”). Under the Director Plan, up to 1,600,000 shares of restricted common stock may be issued through periodic automatic grants of restricted stock to non-employee directors only. The Director Plan provides, each non-employee director who is then serving as a member of the Board shall automatically be granted an award consisting of a number of shares of our restricted common stock equal to: 48,000 shares for the Chairman of the Board, who is also a non-employee director; and 12,000 shares for other non-employee directors, upon initial election to the Board for a one year term (or a lesser amount prorated monthly if the initial election is for a shorter period), which restricted shares are subject to restrictions on transferability as well as a vesting schedule. In the event a recipient of a restricted stock award ceases to be a director for any reason other than death or total disability, any restricted shares of common stock which are then unvested are subject to forfeiture back to us. Once vested, the shares are no longer restricted from transferability pursuant to the terms of the Director Plan and are no longer subject to forfeiture by us upon termination of director status. The Director Plan is intended to be a nondiscretionary plan for purposes of rules and interpretations of the SEC relating to Section 16 of the Exchange Act. In addition to the automatic grant of shares to non-employee directors described above, a one-time grant on May 28, 2002 of 1,168,000 post split shares of restricted stock was approved for the Chairman of the Board, which recognized his personal cost for substantially funding our Company and acting as Chairman of the Board without adequate compensation over a three-year period. This one-time grant vests at the end of each year at the rate of 25% per year. We granted and issued 1,276,000, 96,000, and 104,767 shares, vested and released 405,786, 400,000, and -0- shares and canceled 18,214, 12,000, and -0- shares of restricted stock under the Director Plan in 2004, 2003 and 2002, respectively. No retention fees were paid during 2004. We do not consider the shares of restricted common stock granted and issued under the Director Plan as outstanding at the time of grant due to vesting provisions in the Director Plan. The shares of restricted common stock when granted are issued by us with a second restriction and held in our custody until such time that they are earned and vested. At December 31, 2004 there were 652,767 shares of restricted common stock granted and issued (but not treated as outstanding) and 141,447 shares eligible for grant under the Director Plan.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

In 2002, we entered into long-term employment contracts with our current CEO (Mr. Adams) (in his capacity at the time as Executive Vice President) and a former CFO (Mr. Barbar). Mr. Adams’ agreement was superseded with a new Long Term Agreement in 2005 (SeeSubsequent Events below), while Mr. Barbar’s agreement was terminated on March 31, 2004. In 2004, we entered into an employment agreement with another former CFO (Mr. Dolnick), which was terminated when he resigned on February 14, 2005 (SeeOther Employment Agreement below).

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Long Term Employment Contracts

We agreed to employ under written employment agreements Mr. Adams and Mr. Barbar for a period beginning on January 1, 2002 (the “effective date”) and ending December 31, 2005 (the “employment period”). These contracts followed the same basic structure. (a) For Mr. Adams, we had agreed to the following compensation: (i) annual base salary originally of $105,000, subject to annual review; (ii) an aggregate of 64,000 shares of restricted Common Stock as other compensation, subject to vesting in 4,000 share increments on a quarterly basis commencing on the effective date; (iii) incentive stock options to purchase 26,000 shares, at an exercise price equal to 100% of the fair market value of our Common Stock as of the date of grant, and, subject to vesting, exercisable anytime within five (5) years of the date of grant, vesting up to a maximum of 6,500 per year and after the end of each calendar year according to an Excess Revenue formula; (iv) eligibility to earn performance awards for a minimum aggregate of 34,000 shares of restricted Common Stock during the term of his agreement at a maximum of 8,500 shares during each calendar year; (v) a discretionary bonus; (vi) entitled to participate in medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans; and (vii) paid vacation, fringe benefits and perquisites. Mr. Adams reduced his salary to $90,000 for the 2004 year as part of a strategic organizational initiative. We did not establish any criteria for performance awards and no bonuses were paid to any executive officers during 2004. Mr. Adams did meet the Excess Revenue formula criteria to vest 6,500 stock options and received 16,000 shares of restricted common stock as other compensation during 2004. See Item 13 - Certain Relationships and Related Transactions, Paragraphs 5 and 11, and Subsequent Events below. (b) For Mr. Barbar, the agreement provided for the following compensation: (i) annual base salary of $135,000, subject to annual review; (ii) an aggregate of 51,616 shares of restricted Common Stock as other compensation, subject to vesting in 3,000 share increments on a quarterly basis commencing on the effective date, except the first quarter commencing as of the effective date 6,616 shares will vest at the end thereof; (iii) incentive stock options to purchase 20,000 shares, at an exercise price equal to 100% of the fair market value of our Common Stock as of the date of grant, and, subject to vesting, exercisable anytime within five (5) years of the date of grant, vesting up to a maximum of 5,000 per year and after the end of each calendar year according to an Excess Revenue formula; (iv) eligibility to earn performance awards for a minimum aggregate of 30,000 shares of restricted Common Stock during the term of his agreement at a maximum of 7,500 shares during each calendar year; (v) a discretionary bonus; (vi) entitled to participate in medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans; and (vii) paid vacation, fringe benefits and perquisites. Mr. Barbar’s salary was reduced to $90,000 during the time in which he was employed during 2004. SeeItem 13 - Certain Relationships and Related Transactions, Paragraphs 5 and 6 and Severance from Terminated Employment Contract below.

Termination of Employment Contracts

The above described employment agreements were terminable by us before expiration of the employment period for any reason, but subject to certain terms, conditions and remedies. As of the date of this amended report, the above described agreements have been superseded or terminated. The agreement with Mr. Barbar was considered a Compensated Termination, subject to the following:

Compensated Termination

If an officer resigns for cause or other than a change-in-control (except for a forced resignation), or is terminated by us without cause, in each case prior to the expiration of the employment period, the officer’s employment terminates on the date of termination and he is entitled to: (i) the unpaid portion of salary due up to the termination date; (ii) a severance cash payment equal to 6 months of the then current annual base salary; (iii) restricted shares of common stock equal to 6 months which other compensation will be deemed earned and vested, and any restrictions on such restricted shares except as required by applicable law will immediately lapse and such restricted shares will become nonforfeitable; (iv) stock options equal to the amount receivable within 6 months described in the agreements, will be deemed vested, and any restrictions on such stock options except as required by applicable law will immediately lapse and such stock options will be fully exercisable; (v) the product of any performance awards which the officer can show that he reasonably would have received had he remained in his capacity with us through the end of the calendar year in which occurs his date of termination; (vi) medical and dental benefits only to the officer for 6 months; and (vii) any other amounts or benefits which he is entitled to receive through the date of termination.

Termination Due to Change-in-Control, Death or Permanent Disability

We did not terminate any employment agreements in 2004 due to a change-in-control, death or permanent disability of any executive officer and since the above mentioned employment agreements for Mr. Adams and Mr. Barbar have been superseded or terminated (for other reasons), no further discussion is warranted on this subject matter in this amended report.

Severance from Terminated Employment Contract

We terminated Mr. Barbar’s employment on March 31, 2004. Pursuant to the termination provisions under his agreement, Mr. Barbar was entitled to total cash severance pay equal to $55,081, which is comprised of 6 months of his then current base salary of $45,000, accrued vacation of $3,462, and medical and dental benefits of $6,619. He was also entitled to receive 6,000 shares of restricted common stock for the 6 month period following the date of his termination. Mr. Barbar did not meet the Excess Revenue formula calculation at the time of his termination to vest any more of his incentive stock options and thus, the number eligible for vesting in 2004 and any remaining stock options under his agreement were canceled.

Other Employment Agreement

We entered into an employment agreement with Mr. Dolnick, a former CFO, effective on March 16, 2004, which terminated upon his resignation on February 14, 2005. During the time Mr. Dolnick was employed with us, his annual base salary was $100,000. Mr. Dolnick was eligible to earn an annual bonus of 5,000 shares of restricted common stock based on meeting certain corporate and individual goals (performance awards) pursuant to the 2002 Executive Incentive Plan. We did not establish any criteria for performance awards and no bonuses were paid to any executive officers during 2004. Mr. Dolnick was granted 3,180 incentive stock options covering the period beginning from his date of employment to December 31, 2004, and 4,000 stock options annually thereafter, pursuant to and in accordance with one of our stock option plans. The stock options have an exercise price equal to 100% of the fair market value of our common stock as of the date of grant, and, subject to vesting, are exercisable at any time, in whole or in part, within 3 years of the date of grant. The stock options vest after the end of each calendar year subject to an Excess Revenue formula being met by Mr. Dolnick. Mr. Dolnick met the Excess Revenue formula calculation at the end of the 2004 year and 3,180 stock options vested accordingly. Any remaining stock options under Mr. Dolnick’s agreement were canceled upon his resignation.

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Subsequent Events

We entered into new employment agreements with our CEO, President and COO and CFO and Treasurer in the first quarter of 2005. Refer toItem 13 - Certain Relationships and Related Transactions, paragraphs 10 (Mr. Kramer), 11 (Mr. Adams) and 12 (Mr. Weeks) for more detailed information.

Compensation Committee Interlocks and Insider Participation

There are no members of the Compensation Committee who were officers or employees of the Company or any of our subsidiaries during fiscal 2004, or were formerly officers of the Company, or had any relationship otherwise requiring disclosure hereunder.

REPORT OF THE COMPENSATION COMMITTEE

As members of the Compensation Committee, it is our duty, pursuant to our charter, to develop compensation strategies, policies and programs, evaluate performance of the CEO and other executive officers, administer the equity compensation plans, and prepare for management development and succession. The goals of our executive compensation program are to inspire executives to achieve our business objectives in this environment, to reward them for their achievement, to foster teamwork, and to attract and retain executive officers who contribute to our long-term success. We continually strive to strike an appropriate balance between levels of base compensation that are competitive, annual incentive compensation that varies in a consistent manner with the achievement of individual objectives and corporate financial performance objectives, and long-term incentive compensation that focuses executive efforts on building stockholder value through meeting longer-term financial and strategic goals.

During 2004, we reassessed our entire compensation program established in 2002 and made substantial changes to adapt to the rapidly changing environment in which we currently operate as follows:

1. The 2002 Non-Employee Director Restricted Stock Plan was amended to include a cash retention fee, which is in addition to the restricted common stock grants automatically granted and issued to newly elected (or reelected) or appointed (pro rata portion) members of the Board, specifically for directors that have served for more than three consecutive years on the Board. We also changed the name of the plan to the “Director Compensation Plan” since it covers more than just equity compensation in the plan.

2. The 2002 Executive Incentive Plan was canceled due to the fact that it turned out to be too expansive for the Company’s present and anticipated future needs. No Incentive Awards, Performance Awards, Restricted Stock, Stock Appreciation Rights, Stock Options, or Stock Payments were earned under this plan.

3. The 2002 Management Incentive Plan was canceled due to the fact that it was too expensive to administrate as compared to the expected benefits to be derived from the plan. No Bonus Awards were earned under this plan.

4. The 1998 Employee and Consultant Stock Option Plan automatically terminated pursuant to its terms. All of the registered shares of common stock underlying the options granted under the plan were issued by virtue of all of the outstanding options being exercised by the option holders.

5. The 1999 Consultant and Employee and Stock Purchase and Option Plan automatically terminated pursuant to its terms. All of the registered shares of common stock underlying the options granted under the plan were issued by virtue of all of the outstanding options being exercised by the option holders.

6. The 2000 Stock Purchase and Option Plan was amended to change its name to the Key Employee Stock Option Plan, combine its terms and conditions with the 2002 Stock Option Plan, and eliminate consultants and directors as eligible persons, for administrative convenience. The clear purpose of the Key Employee Stock Option Plan is now featured in its title.

We used salary, restricted common stock, and stock option strategies to meet our compensation program goals in 2004 with our executive officers. Our CEO and a former CFO continued to be compensated under a portion of our former 2002 compensation program elements pursuant to their long term employment agreements, which provided for time based vesting of certain restricted common stock and vesting of stock options based on an excess revenue calculation. This restricted common stock vested and the stock options for our CEO vested. The stock options for a former CFO were canceled upon his termination in March 2004. Our other former CFO was compensated with a competitive salary, eligible to earn restricted common stock and granted stock options. The stock options granted to him in 2004 vested and the remaining restricted common stock and stock options under his agreement were forfeited or canceled as of the date of his resignation in February 2005.

We have revamped our overall compensation program for 2005 and the stock compensation elements for executive officers and key employees will be based solely on individual objectives and corporate financial objectives in furtherance of our objectives towards building value for our stockholders.

COMPENSATION COMMITTEE,

Lt. Gen. Arthur J. Gregg, US Army (Ret), Chairperson

Mr. Gilbert M. Cohen

A-2-16

STOCK PERFORMANCE GRAPH

Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Stock Index and the AMEX Industrial Manufacturing Index for the period beginning December 31, 2000 and ending December 31, 2004. The graph assumes that all dividends have been reinvested. We did not declare any dividends during the past five years.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management

The following table shows how much of our common stock is owned as of March 22, 2005 by each person known to own 5% or more of our common stock, each director, each executive officer named in the Summary Compensation Table and all directors and executive officers as a group.

Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent Beneficially Owned of Class (1)			Amount and Nature of Rights To Acquire Beneficial Ownership (2)		Total Amount Beneficially Owned Including Rights To Acquire Beneficial Ownership		Percent Beneficially Owned including Rights To Acquire Beneficial Ownership of Class (3)
Directors:
Richard J. Kurtz, Chairman of the Board		36,182,283		72.1	%		—		36,182,283		72.1	%
Duck Pond Road, Alpine, New Jersey 07620
Lt. Gen. Arthur J. Gregg, US Army (Ret)		26,500		*			—		26,500		*
Gilbert M. Cohen		4,530		*			—		4,530		*
Michael T. Adams (4)		1,458,507		2.9	%		23,500		1,482,007		2.9	%
Other Named Executive Officers:
Dennis A. Dolnick (Resigned 2/14/05)(5).		—		*			3,180		3,180		*
John G. Barbar (Terminated 3/31/04)(5)		112,437					10,000		122,437		*
All directors and current, and former executive officers, listed above as a group (8)		37,784,257		75.2	%		36,680		37,820,937		75.3	%

____________________

*	Less than 1%
(1)	Based on 50,196,219 shares outstanding on March 22, 2005.
(2)	Represents common stock which the person has the right to acquire within 60 days after March 22, 2005. For current and former executive officers, these shares may be acquired by continued employment and upon the exercise of vested stock options. For Mr. Adams, 4,000 shares of restricted common stock will be issued at the end of the first quarter of 2005 as other compensation, while 19,500 shares may be acquired upon the exercise of vested stock options; and Mr. Dolnick and Mr. Barbar, 3,180 shares and 10,000 shares, respectively, may be acquired upon the exercise of vested stock options.
(3)	Based on 50,232,899 shares deemed outstanding as of March 22, 2005 (Includes those shares in the “Amount and Nature of Rights to Acquire Beneficial Ownership” column).
(4)	Mr. Adams is also our CEO.
(5)	Information provided up to the date of resignation.

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Item 13. Certain Relationships and Related Transactions

We continued to have a recurring need for financial and other support today as we did in prior years to continue our operations. As such is the case, we were required to accept support from our directors to ensure our business progressed.

  1.During 2004, a total of 405,786 shares of restricted common stock were vested and earned by current and former directors pursuant to the Director Compensation Plan (“Director Plan”), of which:

(a)292,000 shares that were issued to our Chairman of the Board, pursuant to a one time grant of 1,168,000 shares approved by the shareholders on May 28, 2002, vested. We did not consider this portion of the shares issued and outstanding due to a vesting provision and as such no value was ascribed to these shares by us as of May 28, 2002. The value ascribed to these shares on May 28, 2004 was $197,100. There are 584,000 shares remaining issued but in our custody until they are earned and vested.

(b)96,000 shares that were automatically granted and issued to current and former directors on June 11, 2003 upon their election at the shareholders meeting held on June 22, 2004, vested. We did not consider these shares issued and outstanding due to a vesting provision and as such no value was ascribed to these shares at the time they were granted. These transactions were valued and recorded at $54,720; and

(c)17,786 shares of the 36,000 shares that were automatically granted and issued to three former directors upon their election at the shareholders meeting held on June 22, 2004, vested in their respective pro rata portions on the dates of their respective resignations, and the remaining 18,214 respective pro rata unvested portions of the shares were forfeited and canceled. We did not consider these shares issued and outstanding due to a vesting provision and as such no value was ascribed for these shares at the time they were granted. These transactions were valued and recorded at approximately $2,324. Refer to paragraph 3 below.

  2.During 2004, a total of 96,000 shares of restricted common stock were automatically granted and issued to current and former non-employee directors pursuant to the Director Plan upon their election at the shareholders meeting held on June 22, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as issued and outstanding and as such no value was ascribed for them at the time of grant. These shares remain in our custody until they are earned and vested. See also 1(c) above (a total of 17,786 shares vested and 18,214 shares were forfeited and canceled upon the resignation of three directors during 2004).

  3.During 2004, a total of 8,767 shares of restricted common stock were automatically granted and issued to a new director pursuant to the Director Plan upon appointment to the Board of Directors on November 12, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as issued and outstanding and as such no value was ascribed for them at the time of grant. These shares remain in our custody until they are earned and vested.

  4.During 2004, we paid approximately $776,983 in dividends through the issuance of 2,877,714 shares of restricted common stock to the former holders of the Series B and C Convertible Preferred Stock. The amount of dividends accrued prior to the automatic conversion of the Series B and C Convertible Preferred Stock on September 30, 2003 and January 1, 2004, respectively. The price per share used to determine the number of shares of restricted common stock to issue to each former holder was calculated based on the closing price of our common stock as traded on the American Stock Exchange on December 30, 2004 or $.27 per share:

(a)The Chairman of the Board was the former sole holder of the Series B Convertible Preferred Stock, and as such, had accrued dividends of approximately $213,497, which were satisfied with the issuance and delivery of 790,731 shares;

(b)The Chairman of the Board was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $260,961, which were satisfied with the issuance and delivery of 966,517 shares; and

(c)A company in which a former director owned a majority interest was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $128,931, which were satisfied with the issuance and delivery of 477,524 shares.

  5.During 2004, we issued 19,000 shares of restricted common stock to a former CFO and the current CEO, as other compensation pursuant to employment agreements, of which 3,000 00 shares were issued to Mr. Barbar and 16,000 shares were issued to Mr. Adams. These transactions were valued and recorded at $7,234.

  6.During 2004, the Company issued 6,000 shares of restricted common stock to a former CFO, as severance compensation pursuant to termination of an employment agreement. This transaction was valued and recorded at $2,940.

  7.During 2004, pursuant to the Certificate of Designation of Preferences of Series C Convertible Preferred Stock, all 673,145 shares of the Series C Convertible Preferred Stock outstanding on the mandatory conversion date, previously valued and recorded in prior years at $13,462,900, were converted into 12,375,024 shares of restricted common stock; of which:

(a)10,684,800 shares were issued to the Chairman of the Board, pursuant to the mandatory conversion of 460,245 shares of Series C Convertible Preferred Stock purchased in 2002 and 2003 and previously valued and recorded at $9,204,900; and

(b)830,000 shares were issued to a corporation in which a former director owns a material interest, pursuant to the mandatory conversion of 100,000 shares of Series C Convertible Preferred Stock purchased in 2002 and previously valued and recorded at $2,000,000.

  8.On January 4, 2005, we issued 18,181,818 shares of restricted common stock to our Chairman of the Board, in exchange for his cancellation of $6,000,000 of indebtedness represented by term loans bearing interest at 9% per annum, which were advanced to us and our subsidiaries during the period commencing with the fourth quarter of 2003 to date. The price per share used to determine the number of shares of restricted common stock for this transaction was 110% of the closing price of our common stock as traded on the AMEX on January 4, 2005 or $ .33 per share.

A-2-18

  9.On January 25, 2005, we entered into a Stock Purchase Agreement with LaPolla Industries, Inc., an Arizona corporation and Billi Jo Hagan, Trustee of the Billi Jo Hagan Trust, Dated October 6, 2003, wherein we agreed to pay $2 Million in cash and issue thirty four shares of our restricted common stock in exchange for all of the issued and outstanding shares of capital stock of LaPolla with a closing scheduled on or before February 28, 2005. On February 11, 2005, the parties entered into an Amendment to Stock Purchase Agreement and Closing Statement to close the transaction in accordance with the terms of the Agreement, as amended. LaPolla, formerly a privately-held company, is located in Tempe, Arizona. LaPolla has 10 employees. The basic assets of LaPolla include manufacturing equipment, product formulations, raw material and finished goods inventory, long term employees, customers and vendors, office equipment, accounts receivable, and goodwill. Our Chairman of the Board and majority shareholder advanced $2 Million in cash to finance the transaction for us. The $2 Million advance was made in the form of a demand loan bearing interest at 9% per annum.

  10.On January 28, 2005, Douglas J. Kramer joined us as President and Chief Operating Officer pursuant to an Executive Employment Agreement. Under the terms and conditions of the agreement, Mr. Kramer agreed to work exclusively for us for a period beginning on the effective date of this agreement and ending on January 31, 2007, unless sooner terminated or extended in accordance with the agreement. The agreement shall be extended automatically for an additional two (2) year period unless either of the parties notify each other that such extension shall not take place. In the event of any extension of this agreement, the terms of his agreement shall be deemed to continue in effect for the term of such extension. His compensation is comprised of a $50,000 signing bonus, an annual base salary of $300,000, which base salary will automatically increase to $350,000 and up to 2 Million shares of restricted common stock when our Company meets certain Sales Goal Thresholds and Gross Profit Margins as set forth in his agreement.

  11.On February 1, 2005, we entered into a new Executive Employment Agreement with Michael T. Adams, our Chief Executive Officer. Under the terms and conditions of the agreement, Mr. Adams agreed to work exclusively for us for a period beginning on the effective date of this agreement and ending on January 31, 2009, unless sooner terminated in accordance with the agreement. His compensation is comprised of an annual base salary of $108,750 and up to 1 Million shares of restricted common stock when our Company meets certain Sales Goal Thresholds and Gross Profit Margins as set forth in the agreement. In addition, we agreed to the continuation of his prior agreement’s compensation as such related to the issuance of restricted common stock as other compensation, subject to vesting in 4,000 share increments on a quarterly basis and incentive stock options, subject to vesting up to a maximum of 6,500 options after the end of each calendar year according to an Excess Revenue formula, for the 2005 year. See alsoItem 11 - Executive Compensation, Long Term Employment Contracts.

  12.On February 25, 2005, Charles R. Weeks joined us as our new Chief Financial Officer and Corporate Treasurer pursuant to an Employment Agreement. Under the terms and conditions of the agreement, Mr. Weeks agreed to work exclusively for us for a period beginning from the date of his employment and ending on February 24, 2007, unless sooner terminated in accordance with the agreement. His compensation is comprised of an annual base salary of $125,000 and 5,000 incentive stock options per year, subject to meeting certain corporate and individual goals and objectives.

Item 14. Principal Accountant Fees and Services

Baum & Company, P.A., our independent registered public accounting firm, audited our consolidated financial statements for the year ended December 31, 2004. The Audit Committee of the Board of Directors selects the independent registered public accounting firm.

Auditor Fees

During the years ended December 31, 2004 and 2003, we retained our independent registered public accounting firm, Baum & Company, P.A., to provide services in the following categories and amounts:

Fee Category	2004		2003
Audit Fees (1)	$	45,500	$	42,600
Audit-Related Fees (2)		853		7,190
Tax Fees		—		—
All Other Fees		—		—
Total	$	46,353		49,790

_______________________

(1)	Represents the aggregate fees billed to us for professional services rendered for the audit of our annual consolidated financial statements, reviews of our quarterly consolidated financial statements, and internal control evaluations.
(2)	Represents the aggregate fees billed to us for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements.

A-2-19

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) 1. Consolidated Financial Statements and Supplementary Data:

The following financial statements are included herein under Item 8:

Report of Management	F/A-2-1
Report of Independent Registered Public Accounting Firm	F/A-2-2
Index to Consolidated Financial Statements	F/A-2-3
Consolidated Balance Sheets at December 31, 2004 and December 31, 2003	F/A-2-4
Consolidated Statements of Operations for Each of the Years in the Three Year Period Ended December 31, 2004	F/A-2-5
Consolidated Statements of Stockholders’ Equity for Each of the Years in the Three Year Period Ended December 31, 2004	F/A-2-6
Consolidated Statements of Cash Flows for Each of the Years in the Three Year Period Ended December 31, 2004	F/A-2-9
Notes to Consolidated Financial Statements	F/A-2-10
Selected Quarterly Financial Data (Unaudited)	F/A-2-23

(a) 2. Financial Statement Schedules:

The following additional information should be read in conjunction with the consolidated financial statements under Item 15(a)1 of Part IV of this amended report:

Report of Independent Registered Public Accounting Firm on Schedule	A-2-22
Consolidated Schedule for the Years Ended December 31, 2004, 2003 and 2002:
Schedule Number
Valuation and Qualifying Accounts	A-2-23

All other schedules are omitted because the required matter or conditions are not present or because the information required by the Schedules is submitted as part of the consolidated financial statements and notes thereto.

(a) 3. Exhibits:

See Index of Exhibits below.

(b) Item 601 Exhibits:

Reference is hereby made to the Index of Exhibits under Item 15(a)3 of Part IV of this amended report.

A-2-20

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC. (F/K/A IFT CORPORATION)
		By:
		Michael T. Adams
		Chief Executive Officer
Date:	March __, 2006	LAPOLLA INDUSTRIES, INC. (F/K/A IFT CORPORATION)
		By:
		John A. Campbell
		Chief Financial Officer

A-2-21

BAUM & COMPANY, P.A.

Certified Public Accountants

1515 University Drive, Suite 226

Coral Springs, Florida 33071

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of LaPolla Industries, Inc. (f/k/a IFT Corporation):

On March 18, 2005, except with respect to the change of name from IFT Corporation to LaPolla Industries, Inc. and matters discussed in Note 21 as to which the date is December 30, 2005, we reported on the consolidated balance sheets of LaPolla Industries, Inc. and subsidiaries as December 31, 2004 and 2003, and the related consolidated statements of income, cash flows, and shareholders’ equity (deficit) for the years ended December 31, 2004, 2003, and 2002. These consolidated financial statements and our report thereon are incorporated by reference in this amended Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule referred to in Item 15(a)(2) in this amended Form 10-K. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audit.

In our opinion, such financial statement schedule referred to above presents fairly, in all material respects, the information set forth therein.

/s/ BAUM & COMPANY, P.A.

Coral Springs, Florida

December 30, 2005

A-2-22

SCHEDULE II

CONSOLIDATED

LAPOLLA INDUSTRIES, INC.

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended December 31, 2004, 2003, and 2002

			Additions
	Balance at		Charged to			Charged					Balance
	Beginning		Costs and			to Other					at End of
Classification	of Period		Expenses			Accounts		Deductions(1)			Period
Year Ended December 31, 2004
Allowance for Doubtful Accounts	$	12,028	$	793		$	—	$	—		$	12,821
Year Ended December 31, 2003
Allowance for Doubtful Accounts	$	12,330	$	(63	)	$	—	$	(239	)	$	12,028
Year Ended December 31, 2002
Allowance for Doubtful Accounts	$	3,342	$	14,180		$	—	$	(5,192	)	$	12,330

Notes:

^[1] Includes write-offs of uncollectible accounts.

A-2-23

INDEX OF EXHIBITS

Exhibit No.	Description
3.1	Restated Certificate of Incorporation dated June 28, 1994 as filed with the State of Delaware on June 16, 1994 (incorporated by reference to Exhibit 3.1 to Form 10-KSB for the year ended December 31, 1998 filed April 16, 1999).
3.2	Certificate of Amendment of Restated Certificate of Incorporation dated February 12, 1999 as filed with State of Delaware February 12, 1999 (incorporated by reference to Exhibit 3.2 to Form 10-KSB for the year ended December 31, 1998 filed April 16, 1999).
3.3	Certificate of Amendment of Restated Certificate of Incorporation dated June 21, 2000 as filed with the State of Delaware on June 26, 2000 (incorporated by reference to Exhibit 3(i) to Form 10-KSB for the year ended December 31, 2000 filed March 30, 2001).
3.4	Certificate of Amendment of Restated Certificate of Incorporation dated May 28, 2002 as filed with the State of Delaware on May 28, 2002 (incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended June 30, 2002 filed August 19, 2002).
3.5	Certificate of Amendment of Restated Certificate of Incorporation dated December 30, 2004 filed in Delaware December 30, 2004.
3.6	Proforma Restated Certificate of Incorporation, as amended, and currently in effect.
3.7	By-laws (incorporated by reference to Exhibit 3(ii) to Form 10-KSB for the year ended December 31, 2000 filed March 30, 2001).
3.8	Amendments to By-laws (incorporated by reference to Item 5. Other Information, Amendments to By-laws, to Form 10-Q for the quarter ended September 30, 2001 filed November 14, 2001).
3.9	By-laws, as amended July 31, 2003, and currently in effect, of the Company (incorporated by reference to Exhibit 3(ii) to Form 10-Q for the quarter ended June 30, 2003 filed August 14, 2003).
4.1	Certificate of Designation of Preferences of Series B Convertible Preferred Stock dated September 30, 2001 filed State of Delaware November 2, 2001 (incorporated by reference to Exhibit 3.1 to Form 8-K dated September 30, 2001 filed October 25, 2001).
4.2	Amendment to Certificate of Designation of Preferences of Series B Convertible Preferred Stock dated December 31, 2001 (incorporated by reference to Exhibit 3.1.1 to Form 8-K dated December 31, 2001 filed January 31, 2002).
4.3	Certificate of Designation of Preferences of Series C Convertible Preferred Stock dated January 8, 2002 filed State of Delaware on February 28, 2002 (incorporated by reference to Exhibit 3.2 to Form 8-K dated January 8, 2002, filed January 31, 2002).
10.1	1998 Employee and Consultant Stock Option Plan (incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-8 No. 333-44971 filed January 27, 1998).
10.2	1999 Consultant and Employee Stock Purchase and Option Plan (incorporated by reference to Exhibit 99.1 to Form 10-KSB for the year ended December 31, 1998 filed April 16, 1999).
10.3	2000 Stock Purchase and Option Plan (incorporated by reference to Exhibit (10) to Registration Statement on Form S-8 No. 333-51026 filed November 30, 2000).
10.4	2002 Stock Option Plan (incorporated by reference to Annex D to Definitive Proxy Statement filed April 30, 2002).
10.5	Key Employee Stock Option Plan.
10.6	2002 Executive Incentive Plan (incorporated by reference to Annex E to Definitive Proxy Statement filed April 30, 2002).
10.7	2002 Management Incentive Plan (incorporate by reference to Annex F to Definitive Proxy Statement filed April 30, 2002).
10.8	2002 Non-Employee Director Restricted Stock Plan (incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2002 filed August 19, 2002).
10.9	Director Compensation Plan.
10.10	Securities Purchase Agreement dated September 30, 2001 between the Company and Richard J. Kurtz (incorporated by reference to Exhibit 10.1 to Form 8-K dated September 30, 2001 filed October 25, 2001).
10.11	Amendment to Securities Purchase Agreement dated September 30, 2001 between the Company and Richard J. Kurtz dated January 4, 2002 (incorporated by reference to Exhibit 10.1.1 to Form 8-K date December 31, 2001 filed January 31, 2002).
10.12	Securities Purchase Agreement dated December 31, 2001 between the Company and Richard J. Kurtz (incorporated by reference to Exhibit 10.2 to Form 8-K dated December 31, 2001 filed January 31, 2002).
10.13	Employment Agreement, effective January 1, 2002, between Michael T. Adams and the Company (incorporated by reference to Exhibit 10.5 to Form 10-Q for the quarter ended March 31, 2002 filed May 15, 2002).
10.14	Employment Agreement, effective January 1, 2002, between John G. Barbar and the Company (incorporated by reference to Exhibit 10.6 to Form 10-Q for the quarter ended March 31, 2002 filed May 15, 2002).
10.15	Series C Preferred Stock Option Agreement dated January 8, 2002 between Richard J. Kurtz and the Company (incorporated by reference to Exhibit 10.3 to Form 8-K dated January 8, 2002, filed January 31, 2002).
10.16	Series C Preferred Stock Option Agreement dated March 21, 2003 between Richard J. Kurtz and the Company (incorporated by reference to Exhibit 10.6 to Form 10-Q for the quarter ended March 31, 2003 filed May 15, 2003).
14.1	Code of Business Ethics and Conduct, as amended, and currently in effect.
21	List of Subsidiaries.
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
31.1-A-2	Certification of Principal Executive Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2-A-2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32-A-2	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

A-2-24

REPORT OF MANAGEMENT

Management is responsible for the preparation and integrity of the consolidated financial statements appearing in this report. The consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States of America appropriate in the circumstances and, accordingly, include some amounts based on management’s best judgments and estimates.

Management is responsible for maintaining a system of internal control and procedures to provide reasonable assurance, at an appropriate cost/benefit relationship, that assets are safeguarded and that transactions are authorized, recorded and reported properly. The internal control system is augmented by internal audits and appropriate reviews by management, policies and guidelines, careful selection and training of qualified personnel and a written Code of Business Ethics and Conduct adopted by the Board of Directors, applicable to all directors, officers and employees of the Company and its subsidiaries. Management believes that the Company’s system of internal control provides reasonable assurance that assets are safeguarded against material loss from unauthorized use or disposition and that the financial records are reliable for preparing financial statements and other data and for maintaining accountability for assets. Management does not expect, however, that the Company’s disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

The Audit Committee of the Board of Directors, composed solely of Directors who are not officers or employees of the Company, meets with the independent auditors and management periodically to discuss internal accounting controls, auditing and financial reporting matters. The Committee reviews with the independent auditors the scope and results of the audit effort. The Committee also meets with the independent auditors without management present to ensure that the independent auditors have free access to the Committee.

The independent registered public accounting firm, BAUM & COMPANY, P.A., was recommended by the Audit Committee of the Board of Directors and selected by the Board of Directors. BAUM & COMPANY, P.A. was engaged to audit the 2004, 2003 and 2002 consolidated financial statements of LaPolla Industries, Inc. (f/k/a IFT Corporation) and its subsidiaries and conducted such tests and related procedures as deemed necessary in conformity with auditing standards generally accepted in the United States of America. The opinion of the independent registered public accounting firm, based upon its audits of the consolidated financial statements, is presented on Page F/A-2-2 of this amended report.

March 28, 2005

Michael T. Adams

Chief Executive Officer

Charles R. Weeks

Chief Financial Officer

With respect to the change of name from IFT Corporation to LaPolla Industries, Inc., identification of a material weakness in the Company’s disclosure controls and procedures, which has now been corrected (Refer to Item 9A of Part II of the Form 10-K/A-2), and matters discussed in Note 21, the following signatures and date shall apply:

March __, 2006

Michael T. Adams

Chief Executive Officer

/s/ John A. Campbell, CFO

John A. Campbell

Chief Financial Officer

F/A-2-1

BAUM & COMPANY, P.A.

Certified Public Accountants

1515 University Drive, Suite 226

Coral Springs, Florida 33071

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of LaPolla Industries, Inc. (f/k/a IFT Corporation):

We have audited the accompanying consolidated balance sheets of LaPolla Industries, Inc. and subsidiaries as of December 31, 2004 and 2003 and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 2004, 2003, and 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of LaPolla Industries, Inc. and subsidiaries as of December 31, 2004 and 2003 and the results of their operations and their cash flows for each of the years ended December 31, 2004, 2003 and 2002, in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 1 to the consolidated financial statements, the Company ceased amortization of goodwill as a result of the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” in 2002.

/s/ BAUM & COMPANY, P.A.

Coral Springs, Florida

March 18, 2005, except with respect to the change of name from IFT Corporation to LaPolla Industries, Inc. and matters discussed in Note 21 (excerpts below) as to which the date is set forth below.

As discussed in Note 21 to the consolidated financial statements, the Company:

(A)Changed its classifications of financial information concerning continuing and discontinued operations for the periods presented.

(B)Changed its classification of financial information concerning direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs, and indirect costs and expenses related to manufacturing, distribution, and warehousing costs for the periods presented.

(C)Changed its method of calculating the allowance for doubtful accounts for the periods presented.

(D)Changed its inventory value for the periods presented.

(E)Changed its presentation to include dividends on preferred stock amounts for the periods presented.

(F)Changed its classification of loans payable - related party amounts for the years ended December 31, 2004 and 2003.

/s/ BAUM & COMPANY, P.A.

Coral Springs, Florida

March 10, 2006

F/A-2-2

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
REPORT OF MANAGEMENT	F/A-2-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F/A-2-2
CONSOLIDATED BALANCE SHEETS
Years Ended December 31, 2004 and 2003	F/A-2-4
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2004, 2003, and 2002	F/A-2-5
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 2004, 2003, and 2002	F/A-2-6
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2004, 2003 and 2002	F/A-2-9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F/A-2-10

F/A-2-3

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2004		2003
	Restated		Restated
Assets
Current Assets:
Cash	$	24,465	$	35,385
Accounts Receivable (Net of Allowance for Doubtful Accounts of $12,821 and $12,028 for 2004 and 2003, respectively)		691,926		565,079
Inventories (Note 4)		267,995		141,677
Prepaid Expenses and Other Current Assets		41,053		14,563
Current Portion of Assets of Discontinued Operations (Note 3)		438		701,024
Total Current Assets		1,025,877		1,457,728
Property, Plant and Equipment, Net (Note 5)		287,784		114,085
Other Assets:
Goodwill, Net (Note 6)		774,000		774,000
Deposits and Other Non-Current Assets		56,471		46,755
Non Current Portion of Assets of Discontinued Operations (Note 3)		—		509,213
Total Other Assets		830,471		1,329,968
Total Assets	$	2,144,132	$	2,901,781

Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Accounts Payable (Note 7)	$	1,126,847		$	1,200,567
Accrued Expenses and Other Current Liabilities (Note 7)		471,008			967,782
Line of Credit (Note 9)		219,152			297,129
Loans Payable - Related Party (Note 10)		5,670,000			60,000
Current Portion of Long-Term Debt (Note 8)		24,582			—
Current Portion of Liabilities from Discontinued Operations (Note 3)		1,220,485			2,341,037
Total Current Liabilities		8,732,074			4,866,515
Other Liabilities:
Non Current Portion of Long-Term Debt (Note 8)		14,243			—
Non Current Portion of Liabilities from Discontinued Operations (Note 3)		525,000			402,349
Reserve for Litigation (Note 11)		15,000			—
Total Other Liabilities		554,243			402,349
Total Liabilities		9,286,317			5,268,864
Stockholders' Equity (Deficit):
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of Which Designations: (Notes 10, 14, 16 and 18)
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued And Outstanding (Less Offering Costs of $7,465) at December 31, 2004 and 2003.		55,035			55,035
Series B Convertible, 500,000 Shares Authorized; 0 Issued And Outstanding, and Converted at December 31, 2004 and 2003, respectively		—			—
Series C Convertible, 750,000 Shares Authorized; -0- and 674,395 Issued and Outstanding at December 31, 2004 and 2003, respectively		—			673,145
Common Stock, $.01 Par Value; 60,000,000 Shares Authorized; 32,014,369 and 16,458,375 Issued and Outstanding as of December 31, 2004 and 2003, respectively		320,144			164,584
Additional Paid-In Capital		53,625,390			52,114,399
Accumulated (Deficit)		(61,142,754	)		(55,374,246	)
Total Stockholders' Equity (Deficit)		(7,142,185	)		(2,367,083	)
Total Liabilities and Stockholders' Equity (Deficit)	$	2,144,132		$	2,901,781

See accompanying notes to consolidated financial statements

F/A-2-4

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31, (A), (B), (C), (D)
	2004			2003			2002
	Restated			Restated			Restated
Revenue:
Coatings, Sealants and Other Products	$	2,564,163		$	2,405,539		$	2,466,035
Total Revenue		2,564,163			2,405,539			2,466,035
Cost of Sales: (B)
Coatings, Sealants and Other Products		1,934,540			1,753,685			1,775,825
Warranty Costs, Freight and Other Cost of Sales (D)		157,391			147,090			265,150
Total Cost of Sales		2,091,931			1,900,775			2,040,975
Gross Profit		472,232			504,764			425,060
Operating Expenses:
Selling, General and Administrative		1,980,170			3,087,915			4,112,966
Professional Fees		417,689			672,218			580,015
Depreciation and Amortization		83,002			47,962			124,522
Research and Development		—			—			24,495
Consulting Fees		226,634			137,581			539,395
Interest Expense		391,912			121,346			45,246
Impairment of Assets		—			837,011			—
Loss on Disposal of Property, Plant and Equipment		—			116,462			—
Total Operating Expenses		3,099,407			5,020,495			5,426,639
Operating (Loss)		(2,627,175	)		(4,515,731	)		(5,001,579	)
(Loss) From Discontinued Operations		(3,141,333	)		(6,668,245	)		(5,818,870	)
Net (Loss) (C) (D)	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)
Plus: Dividends on Preferred Stock		—			(498,001	)		(259,634	)
Net (Loss) Available to Common Stockholders		(5,768,508	)		(11,681,977	)		(11,080,083	)
Net (Loss) Per Share-Basic and Diluted
Continuing Operations	$	(0.091	)	$	(0.328	)	$	(0.386	)
Discontinued Operations		(0.108	)		(0.436	)		(0.427	)
Net (Loss) Per Share	$	(0.199	)	$	(0.764	)	$	(0.813	)
Weighted Average Shares Outstanding		28,866,604			15,264,815			13,605,769

____________________

(A)    Reclassification of Continuing and Discontinued Operations - The Company reclassified the financial data for continuing operations and, on an aggregated basis, discontinued operations, for all periods presented. The aggregate financial data of the Company was not affected by the reclassification. The reclassification affected Coatings, Sealants and Other Products which increased $111,959 for 2002; Warranty Costs, Freight and Other Cost of Sales increased $1 for 2003 and $49,254 for 2002; Total Cost of Sales increased $62,705 for 2002; Gross Profit which decreased $62,705 for 2002; Selling, General and Administrative increased $2 for 2004, and decreased $145,131 for 2003 and $1,439,688 for 2002; Professional Fees decreased $18,068 for 2003 and $1 for 2002; Depreciation and Amortization decreased $40,083 for 2003 and $28,518 for 2002; Interest Expense increased $2,536 for 2003; Loss on Disposal of Property, Plant and Equipment decreased $18,568 for 2004; Total Operating Expenses decreased $18,567 for 2004, $200,746 for 2003, and $1,468,206 for 2002; Operating Loss decreased $18,568 for 2004, $200,746 for 2003, and $1,405,501 for 2002; and Loss from Discontinued Operations increased $18,568 for 2004, $200,746 for 2003, and $1,405,501 for 2002. The reclassification affected Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, decreased $.013 for 2003 and $.103 for 2002; and for Discontinued Operations, increased $.013 for 2003 and $.103 for 2002.

(B)    Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - After the reclassification described in paragraph (A) above, the Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item and included these amounts in the Warranty, Freight and Other Cost of Sales line item for 2004, 2003, and 2002. The aggregate financial data of the Company was not affected by the reclassification. Warranty, Freight and Other Cost of Sales and Total Cost of Sales line items each increased $121,722 for 2004, $74,886 for 2003, and $87,207 for 2002; and Selling, General and Administrative and Total Operating Expenses decreased $121,722 for 2004, $74,886 for 2003, and $87,207 for 2002.

(C)    Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- After the reclassifications described in paragraph (A) and (B) above, the Company restated the Allowance for Doubtful Accounts provision originally included in the Consolidated Balance Sheets and related Bad Debt expense originally included in the Selling, General and Administrative line item, retroactively for 2004, 2003, and 2002. The aggregate financial data of the Company was affected by the restatement. Allowance for Doubtful Accounts decreased $61,518 for 2004, $230,551 for 2003, and $93,890 for 2002. Selling, General and Administrative, Total Operating Expenses, Operating Loss, and Net Loss each increased $143,253 for 2004, and decreased $110,880 for 2003 and $97,232 for 2002. The restatement affected Net (Loss) Per Share - Basic and Diluted for Continuing Operations which increased $.005 for 2004, and decreased $.007 for 2003 and 2002. No income tax effects were related to this restatement. See Note 21 for illustrative requirement.

(D)    Restatement of Inventory and Cost of Sales- After the reclassifications described in paragraph (A) and (B) and restatement in paragraph (C) above, the Company restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations, retroactively for 2004, 2003, 2002, and 2001. The aggregate financial data of the Company was affected by the restatement. Inventory, Total Current Assets and Total Assets each increased $18,956 for 2004, decreased $2,185 for 2003, and increased $19,587 for 2002; Warranty Costs, Freight and Other Cost of Sales, Total Cost of Sales, Operating Loss, and Net Loss each decreased $21,141 for 2004 and increased $21,772 for 2003 and $73,946 for 2002. The restatement affected Net (Loss) Per Share - Basic and Diluted for Continuing Operations which increased $.034 for 2003 and $.024 for 2002. No income tax effects were related to this restatement. See Note 21 for illustrative requirement.

See accompanying notes to consolidated financial statements

F/A-2-5

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

RESTATED

	Preferred Stock Amounts
	Series A		Series B			Series C			Par Value
As of the Year Ended	Shares (a)		Shares			Shares			$1.00
December 31, 2001		62,500		500,000			—		$	555,035
Accumulated Deficit as Previously Reported for January 1, 2002		62,500		500,000			—		$	555,035
Adjustments (C) (D)		—		—			—			—
Accumulated Deficit as Restated for January 1, 2002		62,500		500,000			—		$	555,035
Issuance of Common Stock		—		—			—			—
Issuance of Common Stock - Subscription		—		—			—			—
Issuance of Preferred Stock		—		—			423,281			423,281
Conversion of Preferred Stock to Common Stock		—		—			(8,500	)		(8,500	)
Net (Loss)		—		—			—			—
Accrued Dividends on Preferred Stock and Other Adjustments		—		—			—			—
December 31, 2002		62,500		500,000			414,781		$	969,816
Accumulated Deficit as Previously reported for January 1, 2003		62,500		500,000			414,781		$	969,816
Adjustments (C) (D)		—		—			—			—
Accumulated Deficit as Restated for January 1, 2003		62,500		500,000			414,781		$	969,816
Issuance of Common Stock		—		—			—			—
Issuance of Preferred Stock		—		—			264,614			264,614
Conversion of Preferred Stock to Common Stock		—		(500,000	)		(6,250	)		(506,250	)
Net (Loss)		—		—			—			—
Accrued Dividends on Preferred Stock and Other Adjustments		—		—			—			—
Payment of Preferred Stock Accrued Dividends with Common Stock		—		—			—			—
December 31, 2003		62,500		—			673,145		$	728,180
Accumulated Deficit as Previously Reported for January 1, 2004		62,500		—			673,145		$	728,180
Adjustments (C) (D)		—		—			—			—
Accumulated Deficit as Restated for January 1, 2004		62,500		—			673,145		$	728,180
Issuance of Common Stock		—		—			—			—
Issuance of Preferred Stock		—		—			—			—
Conversion of Preferred Stock to Common Stock		—		—			(673,145	)		(673,145	)
Net (Loss)		—		—			—			—
Accrued Dividends on Preferred Stock and Other Adjustments		—		—			—			—
Payment of Preferred Stock Accrued Dividends with Common Stock		—		—			—			—
December 31, 2004		62,500		—			—		$	55,035

____________________

(See (C) and (D) appearing on Consolidated Statement of Operations)

See accompanying notes to consolidated financial statements

F/A-2-6

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

RESTATED

(CONTINUED)

	Common Stock Amounts
As of the Year Ended	Shares			Par Value $.01			Additional Paid-In Capital
December 31, 2001		13,140,283		$	131,403		$	35,575,058
Accumulated Deficit as Previously Reported for January 1, 2002		13,140,283		$	131,403		$	35,575,058
Adjustments (C) (D)		—			—			—
Accumulated Deficit as Restated for January 1, 2002		13,140,283		$	131,403		$	35,575,058
Issuance of Common Stock		869,521			8,695			1,071,559
Issuance of Common Stock - Subscription		—			—			—
Issuance of Preferred Stock		—			—			8,042,339
Conversion of Preferred Stock to Common Stock		61,450			615			7,885
Net (Loss)		—			—			—
Accrued Dividend on Preferred Stock and Other Adjustments		—			—			—
December 31, 2002		14,071,254		$	140,713		$	44,696,841
Accumulated Deficit as Previously Reported for January 1, 2003		14,071,254		$	140,713		$	44,696,841
Adjustments (C) (D)		—			—			—
Accumulated Deficit as Restated for January 1, 2003		14,071,254		$	140,713		$	44,696,841
Issuance of Common Stock		1,593,996			15,940			1,891,787
Issuance of Preferred Stock		—			—			5,027,666
Conversion of Preferred Stock to Common Stock		793,125			7,931			498,319
Net (Loss)		—			—			—
Accrued Dividend on Preferred Stock and Other Adjustments		—			—			(214	)
Payment of Preferred Stock Accrued Dividends with Common Stock		—			—			—
December 31, 2003		16,458,375		$	164,584		$	52,114,399
Accumulated Deficit as Previously Reported for January 1, 2004		16,458,375		$	164,584		$	52,114,399
Adjustments (C) (D)		—			—			—
Accumulated Deficit as Restated for January 1, 2004		16,458,375		$	164,584		$	52,114,399
Issuance of Common Stock		630,786			6,308			340,453
Issuance of Preferred Stock		—			—			—
Conversion of Preferred Stock to Common Stock		12,375,024			123,750			549,395
Net (Loss)		—			—			—
Accrued Dividend on Preferred Stock and Other Adjustments		(327,530	)		(3,275	)		(127,063	)
Payment of Preferred Stock Accrued Dividends with Common Stock		2,877,714			28,777			748,206
December 31, 2004		32,014,369		$	320,144		$	53,625,390

____________________

(See (C) and (D) appearing on Consolidated Statement of Operations)

See accompanying notes to consolidated financial statements

F/A-2-7

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

RESTATED

(CONTINUED)

	Subscription			Accumulated
As of the Year Ended	Receivable			(Deficit)			Total
December 31, 2001	$	(1,200,000	)		(32,705,719	)		2,355,777
Accumulated Deficit as Previously Reported for January 1, 2002	$	(1,200,000	)		(32,702,377	)		2,359,119
Adjustments (C) (D)		—			90,191			90,191
Accumulated Deficit as Restated for January 1, 2002	$	(1,200,000	)		(32,612,186	)		2,449,310
Issuance of Common Stock		—			—			1,080,254
Issuance of Common Stock - Subscription		1,200,000			—			1,200,000
Issuance of Preferred Stock		—			—			8,465,620
Conversion of Preferred Stock to Common Stock		—			—			—
Net (Loss)		—			(10,820,449	)		(10,820,449	)
Accrued Dividend on Preferred Stock and Other Adjustments		—			(259,634	)		(259,634	)
December 31, 2002	$	—			(43,692,269	)		2,115,101
Accumulated Deficit as Previously Reported for January 1, 2003	$	—			(43,805,746	)		2,001,624
Adjustments (C) (D)		—			113,477			113,477
Accumulated Deficit as Restated for January 1, 2003	$	—			(43,692,269	)		2,115,101
Issuance of Common Stock		—			—			1,907,727
Issuance of Preferred Stock		—			—			5,292,280
Conversion of Preferred Stock to Common Stock		—			—			—
Net (Loss)		—			(11,183,976	)		(11,183,976	)
Accrued Dividend on Preferred Stock and Other Adjustments		—			(498,001	)		(498,215	)
Payment of Preferred Stock Accrued Dividends with Common Stock		—			—			—
December 31, 2003	$	—			(55,374,246	)		(2,367,083	)
Accumulated Deficit as Previously Reported for January 1, 2004	$	—			(55,576,831	)		(2,569,668	)
Adjustments (C) (D)		—			202,585			202,585
Accumulated Deficit as Restated for January 1, 2004	$	—			(55,374,246	)		(2,367,083	)
Issuance of Common Stock		—			—			346,761
Issuance of Preferred Stock		—			—			—
Conversion of Preferred Stock to Common Stock		—			—			—
Net (Loss)		—			(5,768,508	)		(5,768,508	)
Accrued Dividend on Preferred Stock and Other Adjustments		—			—			(130,338	)
Payment of Preferred Stock Accrued Dividends with Common Stock		—			—			776,983
December 31, 2004	$	—		$	(61,142,754	)	$	(7,142,185	)

____________________

(See (C) and (D) appearing on Consolidated Statement of Operations)

See accompanying notes to consolidated financial statements

F/A-2-8

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2004			2003			2002
	Restated			Restated			Restated
Cash Flows From Operating Activities
Net (Loss):
Continuing Operations	$	(2,627,175	)	$	(4,515,731	)	$	(5,001,579	)
Discontinued Operations		(3,141,333	)		(6,668,245	)		(5,818,870	)
Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) Operating Activities:
Depreciation and Amortization		83,002			47,962			124,522
Provision for Losses on Accounts Receivable		793			(302	)		8,988
Impairment of Goodwill		—			837,011			—
Loss on Disposition of Property, Plant and Equipment		—			116,462			—
Stock Based Operating Expenses:
Other Compensation		10,174			42,094			270,690
Board of Director Fees		254,144			174,000			23,625
Interest		—			65,913			37,620
Legal Fees and Settlements		13,500			—			54,750
Consultant Fees and Other Services		62,000			—			160,575
Changes in Assets and Liabilities:
Accounts Receivable		(126,847	)		(240,096	)		63,269
Inventories		(126,318	)		9,090			146,890
Prepaid Expenses and Other Current Assets		(26,490	)		51,360			9,181
Deposits and Other Non Current Assets		(9,716	)		(41,414	)		764
Accounts Payable		(73,720	)		44,080			395,834
Accrued Expenses and Other Current Liabilities		(496,774	)		657,142			78,984
Reserve for Litigation		15,000			—			—
Net Operating Activities of Discontinued Operations		876,765			2,463,981			(30,324	)
Net Cash (Used in) Operating Activities		(5,312,995	)		(6,956,693	)		(9,475,081	)
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment		(184,745	)		—			(429,031	)
Net Investing Activities of Discontinued Operations		2,100			(102,886	)		(457,563	)
Net Cash (Used in) Investing Activities	$	(182,645	)	$	(102,886	)	$	(886,594	)
Cash Flows From Financing Activities
Proceeds from the Issuance of Stock	$	—		$	350,000		$	6,223,000
Proceeds from Line of Credit		17,124			1,051,307			1,090,635
Payments on Line of Credit		(95,101	)		(997,419	)		(1,121,253	)
Proceeds from Loans Payable - Related Party		5,610,000			6,610,000			3,875,000
Principal Repayments on Long Term Debt		(5,402	)		—			—
Principal Payments under Capital Lease Obligation		(2,194	)		—			—
Net Financing Activities of Discontinued Operations		(39,707	)		37,065			(86,631	)
Net Cash (Used in) Financing Activities		5,484,720			7,050,953			9,980,751
Net Increase (Decrease) In Cash		(10,920	)		(8,626	)		(380,924	)
Cash at Beginning of Year		35,385			44,011			424,935
Cash at End of Year	$	24,465		$	35,385		$	44,011
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Income Taxes	$	-0-		$	-0-		$	-0-
Cash Payments for Interest	$	89,024		$	51,764		$	26,193
Supplemental Schedule of Non Cash Investing and Financing Activities:
Property, Plant and Equipment acquired via a Capital Lease Obligation		7,200			—			—
Property, Plant and Equipment acquired via Issuance of Long Term Debt		35,123			—			—
Common Stock Issued for Operating Expenses		339,818			282,007			547,260
Common Stock Issued Upon Conversion of Preferred Stock		673,145			506,250			8,500
Common Stock Issued Upon Cancellation of Indebtedness		—			6,550,000			3,875,000
Common Stock Issued as Payment for Accrued Preferred Stock Dividends		776,983			—			—

____________________

(See also Note 1 - Summary of Significant Accounting Policies, Reclassifications and Changes in Presentation)

See accompanying notes to consolidated financial statements

F/A-2-9

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies.

This summary of significant accounting policies is presented to assist in understanding these consolidated financial statements. The consolidated financial statements and notes are representations of management who are responsible for their integrity and objectivity. The accounting policies used conform to Generally Accepted Accounting Principles (GAAP) in the United States of America and have been consistently applied in the preparation of these consolidated financial statements.

Organization

The Company was incorporated in the state of Delaware on October 20, 1989 as Natural Child Collection, Inc. and changed its name to Natural Child Care, Inc., on January 14, 1991. In 1993, the Company discontinued its Natural Child Care operations, changed its name to Winners All International, Inc., and began random lottery operations. The Company was operationally inactive from August 1, 1995 to January 26, 1997 and on January 29, 1997 abandoned its former random lottery operations, effective for year ended July 31, 1995. On January 28, 1997, the Company acquired Perma Seal International, Inc. and began its development-stage operations largely characterized as research and development for what later became known as its application systems, coatings and sealants operations in 2001. The Company changes Perma Seal International, Inc.’s name to Urecoats International, Inc. in October 1997. The Company changed its name from Winners All International, Inc. to Urecoats Industries Inc. on February 8, 1999. In July 1999, the Company established Urecoats Technologies, Inc. to assist in application systems, coatings and sealants research and development. Rainguard Roofing Corporation, a Florida corporation, was acquired, effective January 1, 2001, to field test the RSM Series™ products and generate revenues in the roof contracting business. In June 2001, upon completion of the commercial RSM Series™ spray application system, ultimately named the BlueMAX™, Model 230, the Company essentially divested its research and development entities, Urecoats International, Inc. and Urecoats Technologies, Inc. Urecoats Manufacturing, Inc., established in June 2001, began sales and marketing of the RSM Series™ products direct to contractors during the fourth quarter of 2001. The Company acquired Infiniti Paint Co., Inc., effective September 1, 2001, to use as a footprint for developing a specialty distribution channel for the initial distribution of the former RSM Series™ products but also to diversify its overall product offerings. Shortly after the Company opened a second Infiniti location in Orlando, Florida, it located a regional distribution chain with over 96 locations at the time which would carry the former RSM Series™ products on an exclusive basis and the expansion of Infiniti ceased to preserve the Company’s cash flow and other resources, and the Orlando location was shut down. The operations of Rainguard Roofing Corporation were discontinued, effective December 31, 2001 to eliminate competition with the former RSM Series™ products customers. On February 1, 2004, Urecoats Manufacturing, Inc. changed its name to RSM Technologies, Inc. to align itself with the character of its RSM Series™ business. The name of Infiniti Paint Co., Inc. was changed to Infiniti Products, Inc. on February 8, 2002 to eliminate the limiting public perception about the character of its business only being related to paints. Urecoats Manufacturing, Inc. discovered a latent defect in the RSM Series™, BlueMAX™ spray application system, which, in addition to mitigating current and future financial impacts of continuing to operate RSM Technologies, Inc., caused us to discontinue the operations of RSM Technologies, Inc., effective November 5, 2004.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material inter-company items and transactions have been eliminated.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of accounts receivable. The Company’s customers consist of contractors and retail outlets serving the paint and coatings industries. The Company performs credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable.

Fair Value of Financial Instruments

The Company has adopted Statement of Financial Accounting Standards No. 107 "Disclosure About Fair Value of Financial Instruments", which requires the disclosure of the fair value of off-and-on balance sheet financial instruments. Unless otherwise indicated, the fair values of all reported assets and liabilities, which represent financial instruments (none of which are held for trading purposes), approximate the carrying values of such amounts.

Litigation

In the normal course of business, the Company is occasionally involved in legal proceedings. The Company accrues a liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. The accrual for a litigation loss contingency might include, for example, estimates of potential damages, outside legal fees and other directly related costs expected to be incurred.

Use of Estimates

The preparation of consolidated financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Cash and Equivalents

The Company considers cash deposited with financial institutions and marketable securities with a maturity of three months or less at the date of acquisition to be cash and cash equivalents.

Inventories

Inventories are valued at the average cost versus market (net realizable value). Cost is determined by the first-in, first-out (FIFO) method.

F/A-2-10

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 1. Summary of Significant Accounting Policies - continued.

Property, Plant and Equipment

Property, Plant and Equipment are stated at cost. Additions, major renewals and improvements are capitalized, while maintenance and repairs are expensed. Upon disposition, the net book value of assets is relieved and resulting gains or losses are reflected in earnings. For financial reporting purposes, depreciation is generally provided on the straight-line method over the useful life of the related asset. The useful lives for additions and betterments, range from three (3) years to five (5) years. Accelerated depreciation methods are generally used for income tax purposes. All long-lived assets are reviewed for impairment in value when changes in circumstances dictate, based upon undiscounted future operating cash flows, and appropriate losses are recognized and reflected in current earnings, to the extent the carrying amount of an asset exceeds its estimated fair value determined by the use of appraisals, discounted cash flow analyses or comparable fair values of similar assets.

Goodwill and Purchased Intangible Assets

Goodwill represents the excess of acquisition cost over the fair value of the assets of acquired businesses. Statement of Financial Accounting Standards no. 142 "Goodwill and Other Intangible Assets" ("SFAS 142") requires goodwill to be tested for impairment, on an annual basis and between annual tests in certain circumstances, and written down when impaired, rather than being amortized as previous accounting standards required.  SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated lives to their estimated residual values, and reviewed for impairment in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets”, unless these lives are determined to be indefinite. The Company considers relevant cash flow and profitability information, including estimated future operating results, trends, and other available information, in assessing whether the carrying value of the intangible assets can be recovered. Based upon the impairment tests performed, there was an impairment of goodwill for the period ended December 31, 2003 of $837,011, restating the Goodwill to be reflected at $774,000 as it appears as of December 31, 2004.  There can be no assurance that future goodwill impairment tests will not result in additional charges to earnings. 

Revenue Recognition

Revenue from Coatings, Sealants and Other Products is recognized as risk and title to the product transfers to the customer (which occurs at the time shipment is made), the sales price is fixed or determinable, and collectibility is reasonably assured. The Company’s sales channels include direct sales, distributors, independent representatives and retail outlets. Irrespective of the sales channel, returns and allowances are not a business practice in the industry. Amounts billed for shipping and handling are classified as sales in the Consolidated Statement of Operations. Costs incurred for shipping and handling are classified as Cost of Sales.

Research and Development

Research and development costs related to both future and present products are charged to operations as incurred.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which requires the establishment of a deferred tax asset or liability for the recognition of future deductions or taxable amounts, and operating loss and tax credit carry-forwards. Deferred tax expense or benefit is recognized as a result of the change in the deferred asset or liability during the year. If necessary, the Company will establish a valuation allowance to reduce any deferred tax asset to an amount that will more likely than not be realized.

Net (Loss) Per Common Share

The Company accounts for (loss) per share in accordance with Statement of Financial Accounting Standard 128 ("SFAS 128") "Earnings Per Share". Basic (loss) per share is based upon the net (loss) applicable to common shares after preferred dividend requirements and upon the weighted average number of common shares outstanding during the period. Diluted (loss) per share reflects the effect of the assumed conversions of convertible securities and exercise of stock options only in periods in which such effect would have been dilutive. Basic and diluted net (loss) per common share are the same since (a) the Company has reflected net losses from continuing operations for all periods presented and (b) the potential common shares would be antidilutive. See also Note 13 - Net Loss Per Common Share - Basic and Diluted.

Stock-Based Compensation

As allowed by Statement of Financial Accounting Standards No. 123, “Accounting for the Stock-Based Compensation”, the Company has elected to continue to apply the intrinsic-value-based method of accounting. Under this method, the Company measures stock based compensation for option grants to employees assuming that options granted at market price at the date of grant have no intrinsic value. Restricted stock awards are valued based on a discounted market price of a share of unrestricted stock on the grant date. No compensation expense has been recognized for stock-based incentive compensation plans other than for the restricted stock granted under the Director Compensation Plan and executive employment agreements (when earned and vested).

Allowance for Doubtful Accounts

The allowances for doubtful accounts represent estimated uncollectible receivables associated with potential customer defaults on contractual obligations, usually due to customers’ potential insolvency. The Company uses the percentage-of-sales method to estimate its allowance provision, which entails analyzing historical data to ascertain the relationship between bad debts and credit sales. The derived percentage is then applied to the current period’s sales revenues in order to arrive at the appropriate charge to bad debts expense for the year. The offsetting credit is made to the allowance for uncollectible account. When specific customer accounts are subsequently identified as uncollectible, they are written off against this allowance. See also Note 21.

F/A-2-11

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 1. Summary of Significant Accounting Policies - continued.

Cost of Sales and Selling, General and Administrative Costs

The Coatings, Sealants and Other Products line item includes all those costs directly associated with the manufacturing of the finished goods for sale and the costs associated with purchasing finished goods for resale, the cost of raw and other materials to make the finished goods, payroll costs associated with manufacturing the finished goods, as well as inbound freight and sales tax expense incurred when receiving materials or finished goods into warehouses. The Warranty Costs, Freight and Other Cost of Sales includes items such as paint and sealant containers, labels, and other miscellaneous items that are indirectly used in the manufacturing, packaging, and shipping (outbound freight) of finished goods, including inspection, internal transfer and any other costs related to our distribution network, and warehousing costs. The Selling, General and Administrative line item includes selling, advertising, marketing, customer service, and technical support, as well as the costs of providing corporate functional support for all other areas of our business. See also Note 21.

Warranty Reserve

The Company established a warranty reserve in 2003. The reserve was primarily established for the RSM Products and eliminated based on the discontinuation of the RSM Products in 2004. Warranty expense for our Infiniti Products for 2004 and 2003 was $9,055 and $128, respectively. See also Note 3.

Reclassifications and Changes in Presentation

Certain reclassifications of prior year amounts have been made to conform to the current year presentation. In addition, the common stockholders of the Company approved a 1-for-10 reverse split and share consolidation on May 28, 2002, which was effectuated at the close of business on May 30, 2002. Furthermore, the Company has separately disclosed the operating, investing and financing portion of the cash flows attributable to its discontinued operations.

New Accounting Standards Not Yet Adopted

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which establishes standards for transactions in which an entity exchanges its equity instruments for goods or services. This standard requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This eliminates the exception to account for such awards using the intrinsic method previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be effective for interim or annual reporting periods beginning on or after June 15, 2005. The Company does not believe SFAS No. 123(R) will have a material impact on its consolidated financial statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,” which eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. SFAS No. 153 will be effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe the adoption of SFAS No. 153 will have a material impact on its consolidated financial statements.

Recently Adopted Accounting Standards

In November 2004, Statement of Financial Accounting Standards No. 151, Inventory Costs an amendment of ARB No. 43, Chapter 4, or SFAS No. 151, was issued and is effective for fiscal years beginning after the date SFAS No. 151 was issued. SFAS No. 151 requires abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) to be recognized as current-period charges, and the allocation of fixed production overheads to the costs of conversion to be based on the normal capacity of the production facilities. The Company adopted the provisions of SFAS No. 151 in the fourth quarter of 2004. The adoption did not have a material effect on the Company’s consolidated financial statements.

In December 2003, the SEC issued Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition“, which supersedes No. 101, “Revenue Recognition in Financial Statements.” SAB No. 104 rescinds accounting guidance on SAB No. 101 related to multiple-element arrangements as this guidance has been superseded as a result of the issuance of EITF 00-21. The Company adopted the provisions of SAB No. 104 in the fourth quarter of 2003. The adoption did not have a material effect on the Company’s consolidated financial statements.

In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (SFAS No. 150), which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires an issuer to classify certain instruments as liabilities (or assets in some circumstances) which may have previously been classified as equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 13, 2003. The provisions of SFAS No. 150 are to be implemented by reporting the cumulative effect of a change in accounting principle for financial instruments created before the issuance date of the statement and still existing at the beginning of the interim period of adoption. The Company adopted the provisions of SFAS No. 150 in the fourth quarter of 2003. The adoption did not have a material effect on the Company’s consolidated financial statements.

In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS No. 149), which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under Financial Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. The provisions of SFAS No. 149 are generally effective for contracts entered into or modified after June 30, 2003 and are to be applied prospectively. The Company adopted the provisions of SFAS No. 149 in the fourth quarter of 2003. The adoption did not have a material effect on the Company’s consolidated financial statements.

F/A-2-12

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 1. Summary of Significant Accounting Policies - continued.

In December 2002, Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation, (SFAS No. 148) was issued and is effective for fiscal years beginning after December 15, 2002. SFAS No. 148 amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS No. 123) to require prominent disclosures in both interim and annual financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 also amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company decided not to voluntarily adopt the SFAS No. 123 fair value method of accounting for stock-based employee compensation. Therefore, the new transition alternatives allowed in SFAS No. 148 has not affected the Company’s consolidated financial statements.

In July 2002, Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities, (SFAS No. 146) was issued and is effective for periods beginning after December 31, 2002. SFAS No. 146 requires, among other things, that costs associated with an exit activity (including restructuring and employee and contract termination costs) or with a disposal of long-lived assets be recognized when the liability has been incurred and can be measured at fair value. Companies must record in earnings from continuing operations costs associated with an exit or disposal activity that does not involve a discontinued operation. Costs associated with an activity that involves a discontinued operation would be included in the results of discontinued operations. The implementation of the provisions of SFAS No. 146 did not have a material effect on the Company’s consolidated financial statements.

In June 2001, Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, (SFAS No. 143) was issued and is effective for fiscal years beginning after June 15, 2002. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The adoption of SFAS 143 did not have a material effect on the Company’s consolidated financial statements.

Note 2. Going-Concern Issues Arising from Recurring Losses and Cash Flow Problems.

While the accompanying audited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. The Company has not earned profits to date, has incurred recurring losses and negative cash flows from operations, and at December 31, 2004 has an accumulated deficit, net of dividends, of $(61,161,710) and its current liabilities exceeded its current assets by $7,725,153 and its total liabilities exceeded its total assets by $7,161,141. These factors raise doubt about the Company’s ability to continue as a going concern if operations were to continue in the future as in the past. The Company has relied principally on non-operational sources of financing mainly from Richard J. Kurtz, the Chairman of the Board, to fund its operations over the past 6 five years. See Note 20 - Subsequent Events, Section (a) (Cancellation of Indebtedness)

Although there has been substantial doubt as a going-concern over the past few years, management believes that 2005 will bring about a turnaround in all respects. New additions to the management team have been put into place, and those individuals are concentrating on increasing sales, integrating an acquisition, widening gross profit percentages, creating new policies and procedures, and streamlining operational processes that should allow the Company to rely less on outside investors and related parties for the funding of continuing operations. SeeNote 20 - Subsequent Events, Section (c), Items (i) (New President and Chief Operating Officer) and (iii) (New Chief Financial Officer and Treasurer. The goal of management is to cover all of the Company’s operational costs on its own through a carefully thought out and strictly enforced budget, and by analyzing the budget variances on a monthly basis to identify those areas representing the greatest risk to allow decisions in those identified areas to be made in a timely and effective manner, in the most expedient manner possible under the circumstances. The Company’s ability to continue as a going concern will be dependent on management’s ability to successfully execute its business plan, including acquisitions (See Note 20 - Subsequent Events, Section (b) (Acquisition of LaPolla Industries Inc.)), increases in revenue, strict control over operating costs and expenses, and obtaining additional forms of debt and/or equity financing. These consolidated financial statements do not include adjustments or disclosures that may result from the Company’s inability to continue as a going concern. If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary in the carrying value of assets and liabilities, and the reported net losses and balance sheet classification used.

Note 3. Discontinued Operations.

On November 5, 2004, the Company discontinued the operations of its RSM Subsidiary and related RSM Products, which consisted of two products lines: Application Systems and Coatings. The consolidated financial statements and the related notes have been recast to reflect the financial position, results of operations and cash flows on an aggregated basis for the Company’s discontinued operations for the periods presented.

Selected operating results for discontinued operations are presented in the following table:

	Year Ended December 31,
	2004			2003			2002
Revenue	$	475,785		$	1,571,317		$	2,549,610
Gross Profit (Loss)		84,568			(1,034,813	)		315,903
Costs and Expenses		(3,617,118	)		(8,239,562	)		(8,368,480	)
(Loss) from Discontinued Operations	$	(3,141,333	)	$	(6,668,245	)	$	(5,818,870	)

During 2002, the Company evaluated all circumstances and determined that a period of five years had passed since any material communications were received relating to the commitments and contingencies reserve initially established in 1997 for certain discontinued operations.  Accordingly, the Company decided that the $600,622 commitments and contingency reserve for these discontinued operations was no longer required and reversed it.

F/A-2-13

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 3. Discontinued Operations - continued.

The assets and liabilities of the discontinued operations presented on an aggregated basis in the Consolidated Balance Sheets consist of the following amounts at December 31:

Assets	2004		2003
Cash	$	438	$	7,333
Accounts and Notes Receivable, Net		—		101,206
Inventories		—		599,242
Machinery and Equipment, Net		—		486,329
Prepaid Expenses and Other Current Assets		—		15,936
Deposits and Other Non Current Assets		—		191
Total Assets	$	438	$	1,210,237
Liabilities
Accounts Payable		662,696		1,069,079
Accrued Expenses and Other Current Liabilities		57,871		722,460
Line of Credit		499,918		499,918
Long Term Debt		—		94,429
Deferred Income		—		7,500
Reserve for Litigation		525,000		350,000
Total Liabilities	$	1,745,485	$	2,743,386

See also Note 11 - Commitments and Contingencies.

Note 4. Inventories.

The following is a summary of inventories for the years ending December 31:

	2004		2003
Raw Materials	$	65,920	$	—
Finished Goods		202,074		141,677
Total	$	267,995	$	141,677

Note 5. Property, Plant and Equipment.

The following is a summary of property, plant and equipment for the years ending December 31:

	2004			2003			Estimated Useful Life
Vehicles	$	137,822		$	—			5 Years
Leasehold Improvements		62,278			—			3 Years
Office Furniture and Equipment		70,195			65,590			5 Years
Computers and Software		192,284			155,434			5 Years
Machinery and Equipment		133,273			—			5 Years
Total Property, Plant and Equipment	$	595,852		$	221,024
Less: Accumulated Depreciation		(308,068	)		(106,939	)
Total Property, Plant and Equipment, Net	$	287,784		$	114,085

Depreciation expense for the years ended 2004 and 2003 was $83,002, and $47,962, respectively.

Note 6. Goodwill.

The following is a summary of goodwill for the years ending December 31:

	2004		2003
Goodwill	$	774,000	$	774,000
Less: Accumulated Amortization		—		—
Total	$	774,000	$	774,000

Goodwill arising from the cost, in excess of fair market value of tangible assets and liabilities acquired, results from the Company's 2001 acquisition of Infiniti Products, Inc. After evaluation by management, as described in Note 1, Goodwill and Purchased Intangible Assets, the asset was impaired by $837,010, leaving a balance of Goodwill in the amount of $774,000.

The Company evaluates the amortization period of goodwill on an ongoing basis, in light of any changes in business conditions, events or circumstances, which may indicate the potential impairment of goodwill.

F/A-2-14

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 7. Accounts Payable and Accrued Expenses and Other Current Liabilities.

The following is a summary of accounts payable and accrued expenses and other current liabilities for the years ending December 31:

	2004		2003
Accounts Payable	$	1,126,847	$	1,200,567
Accrued Severance		—		85,168
Accrued Interest		306,908		—
Accrued Sales Tax		17,392		6,399
Accrued Other		144,221		99,232
Accrued Insurance		2,488		—
Accrued Dividends Payable		—		776,983
Total Accounts Payable and Accrued Expenses and Other Current Liabilities	$	1,597,855	$	2,168,349

Accrued Interest Expense of $306,908 represents interest payable at 9% per annum on unsecured loan proceeds totaling $5,670,000 from the Chairman of the Board. See also Note 14 - Securities Transactions, Section (d).

Note 8. Long-Term Debt.

The following is a summary of long-term debt for the years ending December 31:

	2004			2003
Various notes payable on vehicles, due in monthly installments of $2,564 including interest, maturing through 2007	$	38,825		$	—
Less: Current Maturities		(24,582	)		—
Total Long-Term Debt	$	14,243			—
Debt Maturity Schedule:
Years Ending December 31
2005	$	24,582
2006		13,807
2007		436
	$	38,825

Note 9. Line of Credit.

The Company has an operating Line of Credit with Merrill Lynch Business Financial Services, Inc. This Line of Credit is for the maximum of $220,000, all of which is being utilized as of December 31, 2004; bears interest at prime plus 2% per annum, and was amended to mature on March 31, 2005. It is secured by the assets of Infiniti Products, Inc. and a personal guarantee from the Chairman of the Board.  The maximum “WCMA Line of Credit” of $220,000 is being paid down on a monthly basis until the maturity date of March 31, 2005, at which time the “Maximum WCMA Line of Credit” shall be $180,000. Although the maturity date according to the Agreement is dated March 31, 2005, the Chairman of the Board, who has personally guaranteed this line of credit, will continue to pay down the line of credit by paying $20,000 per month until the balance is paid in full. For the years ended December 31, 2004 and 2003, the Merrill Lynch Business Financial Services, Inc. Line of Credit balances were $219,153 and $297,129, respectively.

Note 10. Related Party Transactions.

The following is a summary of related party transactions for the years ending December 31, 2004 and 2003:

(i) The Chairman of the Board advanced monies in the form of short term loans bearing interest at 9% per annum totaling $5,670,000, of which*:

(a) $5,340,000 was loaned to the Company during 2004; and

(b) $330,000 was loaned to Infiniti Products, Inc. during 2003 and 2004.

*See also Note 20 - Subsequent Events, Section (a) (Cancellation of Indebtedness).

F/A-2-15

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 10. Related Party Transactions - continued.

(ii) The Company issued common stock to officers and directors as follows*:

	2004*				2003
	Shares		Value		Shares		Value
Other Compensation		19,000	$	7,234		84,202	$	34,474
Severance Compensation		6,000		2,940		12,000		7,620
Board of Director Fees		405,786		254,144		496,000		174,000
Board of Director Fees - Unearned		104,767		—		—		—
Mandatory Conversion of Series B Convertible Preferred Stock		—		—		750,000		—
Mandatory Conversion of Series C Convertible Preferred Stock		11,514,800		—		—		—
Exercise of Non-Statutory Option		—		—		300,000		1,188,000
Private Placement		—		—		199,460		135,633
Series B Convertible Preferred Stock Accrued Dividends		790,731		213,497		—		—
Series C Convertible Preferred Stock Accrued Dividends		1,444,041		389,892		—		—
		14,285,125	$	867,707		1,841,662	$	1,539,727

*Refer to Section (iv) below for more information.

(iii) The Company issued preferred stock to directors, as follows:

	2004				2003
	Shares		Value		Shares		Value
Exercise of Option by Cancellation of Indebtedness		—	$	—		264,614	$	5,292,280

(iv) The following is a detailed summary of related party transactions for the year ended December 31, 2004:

(a) During 2004, 405,786 shares of restricted common stock were vested and earned by current and former directors pursuant to the Director Compensation Plan (“Director Plan”), of which:

(i) 292,000 shares that were issued to the Chairman of the Board, pursuant to a one time grant of 1,168,000 shares approved by the shareholders on May 28, 2002, vested. The Company did not consider this portion of the shares outstanding due to a vesting provision and as such no value was ascribed to these shares by the Company as of May 28, 2002. The value ascribed to these shares on May 28, 2004 was $197,100. There are 584,000 shares remaining issued but in the custody of the Company until such time that they are earned. Refer to Note 15 - Compensation and Incentive Stock Plans, Director Compensation Plan.

(ii) 96,000 shares that were automatically granted and issued to current and former directors on June 11, 2003 upon their election at the shareholders meeting held on June 22, 2004, vested. The Company did not consider these shares outstanding due to a vesting provision and as such no value was ascribed to these shares at the time they were granted. These transactions were valued and recorded at $54,720; and

(iii) 17,786 shares of the 36,000 shares that were automatically granted and issued to three former directors upon their election at the shareholders meeting held on June 22, 2004, vested in their respective pro rata portions on the dates of their respective resignations, and the remaining 18,214 respective pro rata unvested portions of the shares were canceled. The Company did not consider these shares outstanding due to a vesting provision and as such no value was ascribed for these shares at the time they were granted. These transactions were valued and recorded at approximately $2,324. Refer to (iv)(c) below.

(b) During 2004, 96,000 shares of restricted common stock were automatically granted and issued to current and former non-employee directors pursuant to the Director Plan upon their election at the shareholders meeting held on June 22, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as outstanding and as such no value was ascribed for them at the time of grant. These shares are in the custody of the Company until such time that they are earned. See also (iv)(b)(iii) above (17,786 shares vested and 18,214 shares were canceled upon the resignation of three directors during 2004).

(c) During 2004, 8,767 shares of restricted common stock were automatically granted and issued to a new director pursuant to the Director Plan upon appointment to the Board of Directors on November 12, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as outstanding and as such no value was ascribed for them at the time of grant. These shares are in the custody of the Company until such time that they are earned.

(d) During 2004, the Company paid approximately $776,983 in dividends through the issuance of 2,877,714 shares of restricted common stock to the former holders of the Series B and C Convertible Preferred Stock. The amount of dividends was accrued prior to the automatic conversion of the Series B and C Convertible Preferred Stock on September 30, 2003 and January 1, 2004, respectively. The price per share used to determine the number of shares of restricted common stock to issue to each former holder was calculated based on the closing price of the Company’s common stock as traded on the American Stock Exchange on December 30, 2004 or $.27 per share:

(i) The Chairman of the Board was the former sole holder of the Series B Convertible Preferred Stock, and as such, had accrued dividends of approximately $213,497, which were satisfied with 790,731 shares;

(ii) The Chairman of the Board was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $260,961, which were satisfied with 966,517 shares; and

F/A-2-16

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 10. Related Party Transactions - continued.

(iii) A company in which a former director owned a majority interest was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $128,931, which were satisfied with 477,524 shares.

(d) During 2004, the Company paid approximately $776,983 in dividends through the issuance of 2,877,714 shares of restricted common stock to the former holders of the Series B and C Convertible Preferred Stock. The amount of dividends was accrued prior to the automatic conversion of the Series B and C Convertible Preferred Stock on September 30, 2003 and January 1, 2004, respectively. The price per share used to determine the number of shares of restricted common stock to issue to each former holder was calculated based on the closing price of the Company’s common stock as traded on the American Stock Exchange on December 30, 2004 or $.27 per share:

(i) The Chairman of the Board was the former sole holder of the Series B Convertible Preferred Stock, and as such, had accrued dividends of approximately $213,497, which were satisfied with 790,731 shares;

(ii) The Chairman of the Board was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $260,961, which were satisfied with 966,517 shares; and

(iii) A company in which a former director owned a majority interest was a former holder of Series C Convertible Preferred Stock, and as such, had accrued dividends of approximately $128,931, which were satisfied with 477,524 shares.

(e) During 2004, the Company issued 19,000 shares of restricted common stock to a former officer and the CEO, as other compensation pursuant to employment agreements. These transactions were valued and recorded at $7,234.

(f) During 2004, the Company issued 6,000 shares of restricted common stock to a former officer, as severance compensation pursuant to termination of an employment agreement. This transaction was valued and recorded at $2,940.

(g) During 2004, pursuant to the Certificate of Designation of Preferences of Series C Convertible Preferred Stock, all 673,145 shares of the Series C Convertible Preferred Stock outstanding on the mandatory conversion date, previously valued and recorded in prior years at $13,462,900, were converted into 12,375,024 shares of restricted common stock; of which:

(i) 10,684,800 shares were issued to the Chairman of the Board, pursuant to the mandatory conversion of 460,245 shares of Series C Convertible Preferred Stock purchased in 2002 and 2003 and previously valued and recorded at $9,204,900; and

(ii) 830,000 shares were issued to a corporation in which a former director owns a material interest, pursuant to the mandatory conversion of 100,000 shares of Series C Convertible Preferred Stock purchased in 2002 and previously valued and recorded at $2,000,000.

Note 11. Commitments and Contingencies.

Leases

The Company has operating leases as follows:

	Location	Description of Operations	Terms
1.	Deerfield Beach, Florida	Corporate Headquarters, Manufacturing, Distribution, and Sales,	02-01-2002 to 03-01-2006
2.	Deerfield Beach, Florida *	Manufacturing, Distribution, and Sales	01-01-2002 to 10-01-2005

* Lease was paid in full in March of 2005, where deposit being held by Trammell Crow Company was applied to remaining payments due through 10-01-2005.

Future minimum lease payments required under the non-cancelable operating leases for the years ending December 31:

	2005	$	155,668
	2006		40,441
Total Minimum Lease Payments		$	196,109

Rent expense for the years ended December 31, 2004, and 2003, was $105,557, and $336,683, respectively.

Reserve

The following is a summary of the reserve established for commitments and contingencies for the year ending December 31:

	2004
Accounts Payable - Discontinued Operations	$	662,696
Accrued Expenses and Other Current Liabilities - Discontinued Operations		57,871
Line of Credit - Discontinued Operations		499,918
Reserve for Litigation - Discontinued Operations		525,000
Reserve for Litigation - Current Operations		15,000
Total	$	1,260,567

There was no reserve for commitments and contingencies in 2003.

F/A-2-17

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 11. Commitments and Contingencies - continued.

Legal Proceedings

(a) Ponswamy Rajalingam and Uma Umarani, Plaintiffs v. Urecoats International, Inc., et. al., Defendants.

On May 15, 2002, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida, Plaintiffs filed a complaint against Urecoats International, Inc., Urecoats Industries Inc., Urecoats Technologies, Inc., and Richard J. Kurtz, Michael T. Adams, and two former officers of the Company, individually, (“Defendants”) and on November 12, 2002, in the Circuit Court of the Seventeenth Judicial Circuit in and for Broward County, Florida, Plaintiffs filed a second complaint against Urecoats International, Inc. and Urecoats Industries Inc., alleging breach of contract, conversion, and other claims under various common law and statutory theories. The Defendants filed an answer denying the allegations and counterclaimed against the Plaintiffs. This matter was settled pursuant to a confidential settlement agreement between the parties on April 21, 2004 prior to trial.

(b) Joglar Painting, Inc., Plaintiff v. Urecoats Industries Inc., Urecoats Manufacturing, Inc., et. al., Defendants

On August 20, 2004, the Company was served notice that on June 24, 2004 in the United States District Court for the District of Puerto Rico the Plaintiff filed a complaint against the Defendants alleging breach of an Exclusive Distribution Agreement for the territory of Puerto Rico that was incorporated in a Sales Agreement entered into between the parties on May 21, 2002. The Plaintiff’s complaint essentially alleges that on October 29, 2003, Urecoats Manufacturing, Inc. arbitrarily terminated the Plaintiff’s “exclusivity” rights under its agreement with Urecoats Manufacturing, Inc. and as a result, it sustained damages aggregating $3,754,000. The Company believes the complaint and alleged damages to be totally without merit, intends to vigorously defend itself and, among other things, will assert counterclaims for monies billed and remaining unpaid for goods delivered to the Plaintiff by Urecoats Manufacturing, Inc. pursuant to the Plaintiff’s purchase order. Discovery has not yet commenced and no trial date is set. The outcome of this litigation cannot be determined at this time.

(c) Plymouth Industries, Inc., Plaintiff v. Urecoats Industries Inc., Urecoats Manufacturing, Inc., et. al., Defendants

On July 22, 2003, the Plaintiff served the Defendants with a complaint for breach of Manufacturing and Sales Agreements and the parties immediately entered into various settlement agreements during which the Defendants were granted an indefinite extension of time to answer the complaint. The Defendants ceased making settlement payments in September 2003 when the Defendants came to believe and later learned that the Plaintiff had breached the Manufacturing and Sales Agreements and thereafter served a joint answer denying the complaint’s allegations and counterclaimed against the Plaintiff for breach of contract, breach of warranties, and indemnity and contribution. On April 27, 2004, the Plaintiff filed the aforementioned complaint in the District Court of the Fourth Judicial District in Hennepin County, Minnesota. On July 13, 2004, the Defendants filed the aforementioned joint answer and counterclaims with said District Court. On August 4, 2004, the Plaintiff was granted summary judgment against the Defendants, joint and severally, in the amount of $738,163 with any applicable costs, fees, and pre-judgment interest to be determined and added to this summary judgment at a later date. The Defendants believed that reversible procedural and substantive errors were made and that valid legal redress existed to not only offset the summary judgment with counterclaims but also to potentially vacate the summary judgment. On October 27, 2004, the Court issued an order granting the Defendants’ motion to vacate the summary judgment ordered on August 4, 2004. On February 18, 2005, the Court granted a 45 day extension on Plaintiff’s second motion for summary judgment, which was scheduled for March 3, 2005. Mediation is scheduled for April 21, 2005. The outcome of this litigation cannot be determined at this time.

(d) Raymond T. Hyer, Jr. and Sun Coatings, Inc., Plaintiffs v. Urecoats Industries Inc., et. al, Defendants

On October 3, 2003, in the Hillsborough County State Court, Division H, Plaintiffs filed a complaint against Urecoats Industries Inc. and Michael T. Adams, John G. Barbar, and a former officer of the Company, individually, alleging common law fraud and rescission in connection with their purchase of common stock in the Company. Plaintiff Hyer purchased $100,000 worth of common stock in June 2003 and Plaintiff Sun Coatings purchased $250,000 worth of common stock in July 2003. Plaintiffs allege that the Company and certain present and former officers failed to disclose the current financial condition of the Company and its subsidiaries (notwithstanding that the Plaintiffs signed subscription agreements admitting that they were provided all relevant and requested financial information). The Defendants’ motion to dismiss was denied by Order dated January 20, 2004. The Defendants answered the complaint on February 13, 2004 and asserted, among others, the affirmative defense that Plaintiffs’ claims are barred by their signed subscription agreements. Discovery has not yet commenced and no trial date is set. The outcome of this litigation cannot be determined at this time.

(e) Various Lawsuits and Claims Arising in the Ordinary Course of Business

The Company is involved in various lawsuits and claims arising in the ordinary course of business. These other matters are, in the opinion of the Company’s management, immaterial both individually and in the aggregate with respect to the Company’s consolidated financial position, liquidity or results of operations.

Note 12. Income Taxes.

At December 31, 2004, the Company has taxable net operating loss carry-forwards of approximately $60,778,436 to be utilized to offset taxable income for the next 20 years. The Company files a consolidated income tax return and cumulative timing difference between the recognition of certain income and expense items for income tax purposes and financial reporting purposes are as follows:

Cumulative Benefit of Net Operating Loss Carry-Forwards	$	61,142,754
Issuance of Stock for Officers and Directors Compensation		(264,318	)
Tax Depreciation versus Book Depreciation		(100,000	)
Total Cumulative Benefit of Net Operating Loss Carry-Forwards	$	60,778,436
Total Deferred Tax Asset	$	20,664,668
Less Valuation Allowance		(20,664,668	)
Net Deferred Tax Asset	$	—

Approximately $11,446,298 of the net operating loss carry-forwards are subject to limitations based on discontinued operations and discontinued operating subsidiaries' abilities to generate future taxable income. The Company expects to benefit from the deferred tax asset in the near future.

F/A-2-18

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 13. Net Loss Per Common Share - Basic and Diluted.

The following table reflects the computation of the basic and diluted net loss per common share:

	For The Year Ended December 31,
	2004						2003						2002
				Per Share						Per Share						Per Share
	Amount			Amount			Amount			Amount			Amount			Amount
Operating (Loss)	$	(2,627,175	)	$	(0.091	)	$	(4,515,731	)	$	(0.295	)	$	(5,001,579	)	$	(0.367	)
(Loss) from Discontinued Operations		(3,141,333	)		(0.108	)		(6,668,245	)		(0.436	)		(5,818,870	)		(0.427	)
Net (Loss)	$	(5,768,508	)	$	(0.199	)	$	(11,183,976	)	$	(0.731	)	$	(10,820,449	)	$	(0.794	)
Plus: Dividends on Preferred Stock		—			—			(498,001	)		(0.033	)		(259,634	)		(0.019	)
Net (Loss) Available to Common Stockholders	$	(5,768,508	)	$	(0.199	)	$	(11,681,977	)	$	(0.764	)	$	(11,080,083	)	$	(0.813	)
Weighted Average Common Shares Outstanding		28,866,604						15,264,815						13,605,769

Basic and diluted net (loss) per share are the same since (a) the Company has reflected net losses for all periods presented and (b) the potential issuance of shares of the Company would be antidilutive. The securities that could potentially dilute (loss) per share in the future that were not included in the computation of diluted (loss) per share were (i) 652,767, 972,000 and 1,276,000 shares, respectively, of nonvested restricted common stock issued to eligible directors but held by the Company pursuant to vesting restrictions under the Director Compensation Plan, (ii) 116,321, 239,025 and 521,283 vested stock options, respectively, and (iii) conversion of securities (preferred stock) convertible into 2,250, 6,173,994 and 2,429,781 shares, respectively, of common stock, for the years ended December 31, 2004, 2003 and 2002, respectively.

Note 14. Securities Transactions.

(a) During 2004, 405,786 shares of restricted common stock issued pursuant to the Director Plan, vested and were released to current and former directors. These transactions were valued and recorded at $254,144. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (b).

 (b) During 2004, 96,000 shares of restricted common stock were automatically granted and issued to current and former non-employee directors pursuant to the Director Plan upon their election at the shareholders meeting held on June 22, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as outstanding and as such no value was ascribed for them at the time of grant. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (c).

 (c) During 2004, 8,767 shares of restricted common stock were automatically granted and issued to a new director pursuant to the Director Plan upon appointment to the Board of Directors on November 12, 2004, which shares generally vest at the next annual meeting of shareholders. Due to a vesting provision in the Director Plan, these shares were not treated as outstanding and as such no value was ascribed for them at the time of grant. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (d).

 (d) During 2004, the Company paid approximately $776,983 in dividends through the issuance of 2,877,714 shares of restricted common stock to the former holders of the Series B and C Convertible Preferred Stock. The amount of dividends was accrued prior to the automatic conversion of the Series B and C Convertible Preferred Stock on September 30, 2003 and January 1, 2004, respectively. The price per share used to determine the number of shares of restricted common stock to issue to each former holder was calculated based on the closing price of the Company’s common stock as traded on the American Stock Exchange on December 30, 2004 or $.27 per share. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Items (e)(i), (e)(ii) and (e)(iii).

 (e) During 2004, the Company issued 19,000 shares of restricted common stock to a former officer and the CEO, as other compensation pursuant to employment agreements. These transactions were valued and recorded at $7,234. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (f).

 (f) During 2004, the Company issued 6,000 shares of restricted common stock to a former officer, as severance compensation pursuant to termination of an employment agreement. This transaction was valued and recorded at $2,940. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (g).

 (g) During 2004, pursuant to the Certificate of Designation of Preferences of Series C Convertible Preferred Stock, all 673,145 shares of the Series C Convertible Preferred Stock outstanding on the mandatory conversion date, previously valued and recorded in prior years at $13,462,900, were converted into 12,375,024 shares of restricted common stock. See also Note 10 - Related Party Transactions, Section (ii) and Section (iv), Items (h)(i) and (h)(ii).

 (h) During 2004, the Company issued 50,000 shares of restricted common stock pursuant to a partial exercise of a Non-Plan restricted stock option in exchange for marketing services. This transaction was valued and recorded at $35,000.

 (i) During 2004, the Company issued 150,000 shares of common stock pursuant to the exercise of Plan options in exchange for contracting services and cancellation of legal fees. These transactions were valued and recorded at $40,500.

 (j) During 2004, the Company made certain administrative and confidential legal settlement adjustments returning 327,530 shares of common stock, net, to unissued status. These transactions were valued and recorded at $131,861, net, and offset against common stock and additional paid-in capital accordingly.

F/A-2-19

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 15. Compensation and Incentive Stock Plans.

The Compensation Committee of the Board of Directors administers the Company's Compensation and Incentive Stock Plans, each of which is briefly described below:

Director Compensation Plan

The Company has a non-employee director incentive plan which provides for the issuance of restricted common stock to non-employee directors for Board service fees and cash to eligible non-employee directors as retention fees. The Board of Directors amended the 2002 Non-Employee Director Restricted Stock Plan to include, in addition to automatic grants of restricted common stock, a retention fee, payable on a quarterly basis, of $10,000 per year, for non-employee directors who serve on the Board for more than three consecutive years, and change the name of the plan to the “Director Compensation Plan” for increased transparency (the “Director Plan”). Under the Director Plan, up to 1,600,000 shares of restricted common stock may be issued through periodic automatic grants of restricted stock to non-employee directors only. The Director Plan provides, each non-employee director who is then serving as a member of the Board shall automatically be granted an award consisting of a number of shares of restricted common stock of the Company equal to: 48,000 for the Chairman of the Board, who is also a non-employee director; and 12,000 for other non-employee directors, upon initial election to the Board for a one year term (or a lesser amount prorated monthly if the initial election is for a shorter period).  In addition to the automatic grant of shares to non-employee directors described above, a one-time grant on May 28, 2002 of 1,168,000 post split shares of restricted stock was approved for the Chairman of the Board, which recognizes his personal cost for substantially funding us and acting as Chairman of the Board without adequate compensation over a three-year period. This one-time grant vests at the end of each year at the rate of 25% per year.

The Company granted and issued 1,276,000, 96,000, and 104,767, vested and released 405,786, 400,000, and -0-, canceled 18,214, 12,000, and -0-, shares of restricted stock under the Director Plan in 2004, 2003 and 2002, respectively. No retention fees were paid during 2004. The Company does not consider the shares of restricted common stock granted and issued as outstanding at the time of grant due to vesting provisions in the Director Plan. The shares of restricted common stock when granted are issued by the Company with a second restriction and held in the custody of the Company until such time that they are earned and vested. At December 31, 2004 there were 652,767 shares of restricted common stock granted and issued (unearned and unvested) and 141,447 eligible for grant under the Director Plan. Compensation expense recognized under the Director Plan was $254,144 in 2004, $174,000 in 2003 and $-0- in 2002.

2002 Executive Incentive Plan

The Board of Directors approved the 2002 Executive Incentive Plan, effective January 1, 2002, which was ratified and approved by the shareholders on May 28, 2002.  No Incentive Awards, Performance Awards, Restricted Stock, Stock Appreciation Rights, Stock Options, or Stock Payments were earned under this plan as of December 31, 2004. The Compensation Committee canceled this plan, effective December 31, 2004.

2002 Management Incentive Plan

The Board of Directors approved the 2002 Management Incentive Plan, effective January 1, 2002, which was ratified and approved by the shareholders on May 28, 2002.  No Bonus Awards were earned under this plan as of December 31, 2004. The Compensation Committee canceled this plan, effective December 31, 2004.

Executive Employment Agreement

The Company entered into an executive employment agreement with its CEO for a period beginning on January 1, 2002 (the “effective date”) and ending December 31, 2005 (the “employment period”). Under this agreement, the Company agreed to the following compensation: (i) annual base salary of $90,000, subject to annual review; (ii) an aggregate of 64,000 shares of restricted common stock as other compensation, subject to vesting in 4,000 share increments on a quarterly basis commencing on the effective date; (iii) incentive stock options to purchase 26,000 shares, at an exercise price equal to 100% of the fair market value of our common stock as of the date of grant, and, subject to vesting, exercisable anytime within 5 years of the date of grant, vesting up to a maximum of 6,500 per year and after the end of each calendar year according to an Excess Revenues formula; (iv) eligibility to earn performance awards for a minimum aggregate of 34,000 shares of restricted common stock during the term of the agreement at a maximum of 8,500 shares during each calendar year; (v) a discretionary bonus; (vi) entitled to participate in medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans; and (vii) paid vacation, fringe benefits and perquisites. See also Note 20 - Subsequent Events, Section (c), Item (ii).

Key Employee Stock Option Plan

This plan was originally established as the 2000 Stock Purchase and Option Plan, which was approved by the shareholders of the Company on June 20, 2000. The Board of Directors amended the 2000 Stock Purchase and Option Plan, effective December 31, 2004, to change its name to the Key Employee Stock Option Plan, combine its terms and conditions with the 2002 Stock Option Plan (which was approved by the shareholders on May 28, 2002), and eliminate consultants and directors as Eligible Persons (the “Key Employee Plan”), for administrative convenience. Under the Key Employee Plan, either Incentive Stock Options or Non-Qualified Stock Options may be granted. Generally, the options may be exercised beginning one year from the date of grant and expire in two to five years. The Key Employee Plan provides for the grant of an aggregate of 825,000 options, which are exercisable for common stock. There were 406,450 options exercised, 115,321 options outstanding and 303,229 options available for grant under the Key Employee Plan as of December 31, 2004.

1998 Employee and Consultant Stock Option Plan

On January 26, 1998, the Company adopted the "1998 Employee and Consultant Stock Option Plan" (the "1998 Plan"). Under the 1998 Plan, either Incentive Stock Options or Non-Qualified Stock Options may be granted; however, the former may be granted only to employees of the Company. Generally, the options may be exercised beginning one year from the date of grant and expire in two to five years. The 1998 Plan provides for the grant of an aggregate of 300,000 options, which are exercisable for common stock. There were 300,000 options exercised and -0- options available for grant under the 1998 Plan as of December 31, 2004.

F/A-2-20

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 15. Compensation and Incentive Stock Plans - continued.

1999 Consultant and Employee Stock Purchase and Option Plan

The 1999 Consultant and Employee Stock Purchase and Option Plan was approved by shareholders on February 8, 1999 ("1999 Plan"). Under the 1999 Plan, either Incentive Stock Options or Non-Qualified Stock Options may be granted; however, the former may be granted only to employees of the Company. Generally, the options may be exercised beginning one year from the date of grant and expire in two to five years. The 1999 Plan provides for the grant of an aggregate of 800,000 options, which are exercisable for common stock.  There were 800,000 options exercised and -0- options available for grant under 1999 Plan as of December 31, 2004.

Non-Plan Restricted Stock Options

The Company grants restricted options from time to time for special circumstances ("Non-Plan options").  The Company did not grant any Non-Plan Options during 2004.  There were 50,000 Non-Plan Options exercised, 55,264 canceled/expired, and 70,000 outstanding as of December 31, 2004.

Stock Option Activity Table

Stock option activity under the Company’s 1998 Plan, 1999 Plan, Key Employee Stock Option Plan, and Non-Plan Options as of the years ended December 31, is summarized below:

	2004					2003					2002*
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding-Beginning of Year		372,274		$	2.63		739,450		$	3.21		492,050		$	3.90
Granted		150,000			.27		188,159			.84		493,800			2.55
Exercised		(200,00	)		.38		(315,000	)		3.83		(100,000	)		1.00
Canceled		(10,000	)		3.00		(140,335	)		2.99		(133,500	)		1.78
Expired		(126,953	)		2.38		(100,000	)		1.78		(12,900	)		10.01
Outstanding-End of Year		185,321			3.23		372,274			2.63		739,450			3.21
Exercisable-End of Year		122,821		$	4.22		239,024		$	3.33		516,783		$	3.66

*The figures under this section have been adjusted for the 1-for-10 share consolidation approved by the shareholders in 2002.

The following table provides additional information relating to stock option activity for Plan and Non-Plan Stock Options for the year ended December 31, 2004:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding At 12/31/04		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Number Exercisable At 12/31/04		Weighted Average Exercise Price
$ .70 - $ 2.99		51,333		1.9	$	.73		1,333	$	1.90
$3.00 - $ 4.29		98,988		1.7	$	3.00		92,488	$	3.00
$4.30 - $ 5.89		15,000		1.7	$	4.30		9,000	$	4.30
$5.90 - $10.00		20,000		1.0	$	10.00		20,000	$	10.00
$ .70 - $10.00		185,321		1.66	$	3.23		122,821	$	4.22

Accounting for Stock Based Compensation

As allowed by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the Company has elected to continue to apply the intrinsic-value-based method of accounting. Under this method, the Company measures stock based compensation for option grants to employees assuming that options granted at market price at the date of grant have no intrinsic value. Restricted stock awards were valued based on the discounted market price of a share of non-restricted stock on the date earned. No compensation expense has been recognized for stock-based incentive compensation plans other than for restricted stock awards pursuant to executive employment agreements (See Note 15) and board of director fees pursuant to the Director Compensation Plan (See Note15). No compensation expense was recorded for any non-plan restricted stock options ("Non-Plan Options").  Had compensation expense for the Company's stock options under the stock-based incentive compensation plans described above (excluding Non-Plan Options) been recognized based upon the fair value for awards granted, the Company's net (loss) would have been increased to the following pro forma amounts:

	2004			2003			2002
Net (Loss) Available to Common Stockholders, as Reported	$	(5,768,508	)	$	(11,681,977	)	$	(11,080,083	)
Stock-Based Compensation Expense Determined Under Fair Value Based Method, Net of Tax (a)		—			—			—
Pro Forma Net (Loss)	$	(5,768,508	)	$	(11,681,977	)	$	(11,080,083	)
Net (Loss) Per Share:
As Reported - Basic and Dilutive	$	(0.199	)	$	(0.764	)	$	(0.813	)

(a)As a result of the Company's highly volatile common stock trading performance in each of the respective years in this table, the overall strike prices of the outstanding options, and the uncertainty about its future economic performance, management has deemed the fair value of these options to be indeterminable.  Accordingly, for the years ended December 31, 2004, 2003, and 2002, the value of the options is deemed to be -0-.

F/A-2-21

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 16. Stockholders' Equity.

Preferred Stock

Series A Convertible Preferred Stock

The Board of Directors reduced the number of authorized shares of Series A, $1.00 par value preferred stock, from 2,000,000 shares to 750,000 shares, leaving 1,250,000 shares to be designated a series of distinction and issued by the Board. Each share of the Series A preferred stock entities its holder to convert it into .036 shares of common stock, as adjusted in the event of future dilution; to receive $1.00 per share in the event of voluntary or involuntary liquidation, to have the same voting rights as the common stock, and to share equally in payments of any dividends declared by the Board of Directors.

Series B Convertible Preferred Stock

The Board of Directors designated a new series of preferred stock, Series B Convertible Preferred Stock, effective September 30, 2001, par value $1.00, and authorized 500,000 shares for issuance. The stated value per each share of Series B Convertible Preferred Stock was $5.00 per share.  The certificate of designation of preferences of the Series B Convertible Preferred Stock had a mandatory conversion date of September 30, 2003. On September 30, 2003, the Company converted the Series B Convertible Preferred Stock, all of which was owned by the Chairman of the Board, into 750,000 shares of restricted common stock (the conversion rate was 1.5 shares of restricted common stock for each share of Series B Convertible Preferred Stock). The former registered holder of the Series B Preferred Stock was entitled to receive cumulative dividends initially at the rate of 4% per annum of the stated value per each share of Series B Convertible Preferred Stock, which per annum rate increased to 9% in 2002. Such dividend accrued on each share of Series B Convertible Preferred Stock from the date of issuance of such shares (with appropriate pro-ration for any partial dividend period) and accrued from day-to-day, whether or not earned or declared, until the mandatory conversion date. The dividends of $213,497 accrued as of September 30, 2003, were paid through the issuance of 790,731 shares of restricted common stock in 2004. See Note 10 - Related Party Transactions, Section (ii) and Section (iv), Item (e)(i).

Series C Convertible Preferred Stock

The Board of Directors designated a new series of preferred stock, Series C Convertible Preferred Stock, effective January 8, 2002, par value $1.00, and authorized 750,000 shares for issuance. The stated value per each share of Series C Convertible Preferred Stock was $20.00 per share. The certificate of designation of preferences of the Series C Convertible Preferred Stock has a mandatory conversion date of January 1, 2004. On January 1, 2004, the Company converted all 673,145 shares of the Series C Convertible Preferred Stock outstanding, into 12,375,024 shares of restricted common stock (the conversion rate was determined at the time of purchase pursuant to a discount formula related to the amount of investment by each investor. The discount formula was based upon two variables: (1) the total amount of the subscription on the date of purchase; and (2) the average of the closing bid prices per share for the common stock during the 30 trading days immediately preceding (and including) the date of subscription.  Once determined, the price per share (of common stock into which each share of the Series C Convertible Preferred Stock is convertible) is divided into the amount paid per share for the Series C Convertible Preferred Stock in order to determine the number of shares of common stock issuable upon conversion of each share of Series C Convertible Preferred Stock. The former registered holders of the Series C Convertible Preferred Stock were entitled to receive cumulative dividends at the rate of 4% per annum of the stated value per each share of Series C Convertible Preferred Stock.  Such dividend accrued on each share of Series C Convertible Preferred Stock from the date of issuance of such share (with appropriate pro-ration for any partial dividend period) and accrued from day-to-day, whether or not earned or declared, until the mandatory conversion date. The dividends of $776,983 accrued as of January 1, 2004, were paid through the issuance of shares of restricted common stock in 2004. See Note 10 - Related Party Transactions, Section (ii) and Section (iv), Items (d), (e)(ii) and (e)(iii).

Note 17. Concentration of Credit Risk.

The Company's cash balances in financial institutions at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash. New Credit Risk policies and procedures have been put in place during the first quarter of 2005, which will minimize the Company’s risk in regards to uncollectible accounts in the future. Customers will be rated and then granted certain limits based on their credit worthiness by an outside agency. If the customer fails to pay within certain guidelines established up front by the agency, the Company will be able to collect on these debts after paying an agreed upon percentage and premium throughout the year. As sales increase, so does the premium for protection of our accounts. This process should greatly protect the Company against all material uncollectibles going into the future.

Note 18. Securities Capitalization.

The following table provides information relating to the Company's common and preferred stock capitalization as of December 31, 2004:

				Preferred
Shares	Common			Series A			Series B			Series C			Total of Series A, B and C
Authorized		60,000,000			750,000			500,000			750,000			2,000,000
Issued and Outstanding		(32,014,369	)		(62,500	)		—			—			(62,500	)
Converted		—			(687,500	)		(500,000	)		(687,895	)		(1,875,395	)
Reserved		1,301,014	*		—			—			—			—
Available		26,684,617			—			—			62,105			62,105

*Reserves allocated as follows:

(a) Director Compensation Plan 794,214 See also Note 15.

(b) Key Employee Stock Option Plan 418,550 See also Note 15.

(c) Executive Employment Agreement 16,000 See also Note 15.

(d) Non Plan Restricted Stock Options 70,000 See also Note 15.

(e) Series A Convertible Preferred Stock 2,250 See also Note 16.

F/A-2-22

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 19. Selected Quarterly Financial Data (Unaudited)

	2004 Quarters Ended, (A), (B), (C), (D), (E)
	March 31			June 30			September 30			December 31
	Restated			Restated			Restated			Restated
Revenue	$	460,897		$	586,629		$	521,852		$	994,785
Gross Profit	$	104,272		$	113,671		$	88,447		$	165,842
Operating (Loss)	$	(622,108	)	$	(959,286	)	$	(493,679	)	$	(552,102	)
Income (Loss) from Discontinued Operations	$	(1,084,929	)	$	(569,251	)	$	(1,764,031	)	$	276,878
Net (Loss) (C)	$	(1,707,037	)	$	(1,528,537	)	$	(2,257,710	)	$	(275,224	)
Plus: Dividends on Preferred Stock	$	—		$	—		$	—		$	—
Net (Loss) Available to Common Stockholders	$	(1,707,037	)	$	(1,528,537	)	$	(2,257,710	)	$	(275,224	)
Net (Loss) Per Share-Basic and Diluted:
Continuing Operations	$	(0.021	)	$	(0.033	)	$	(0.017	)	$	(0.019	)
Discontinued Operations	$	(0.037	)	$	(0.019	)	$	(0.061	)	$	0.009

	2003 Quarters Ended, (A), (B), (C), (D), (E)
	March 31			June 30			September 30			December 31
	Restated			Restated			Restated			Restated
Revenue	$	708,867		$	602,235		$	603,888		$	490,549
Gross Profit	$	134,808		$	179,125		$	104,754		$	86,077
Operating (Loss)	$	(909,584	)	$	(1,638,779	)	$	(814,585	)	$	(1,152,783	)
(Loss) from Discontinued Operations	$	(1,249,989	)	$	(2,071,458	)	$	(969,651	)	$	(2,377,147	)
Net (Loss) (C)	$	(2,159,573	)	$	(3,710,237	)	$	(1,784,236	)	$	(3,529,930	)
Plus: Dividends on Preferred Stock	$	(138,295	)	$	(106,664	)	$	(130,594	)	$	(122,448	)
Net (Loss) Available to Common Stockholders	$	(2,297,868	)	$	(3,816,901	)	$	(1,914,830	)	$	(3,652,378	)
Net (Loss) Per Share-Basic and Diluted:
Continuing Operations	$	(0.074	)	$	(0.112	)	$	(0.057	)	$	(0.083	)
Discontinued Operations	$	(0.088	)	$	(0.133	)	$	(0.058	)	$	(0.155	)

We discontinued the operations of our RSM Subsidiary on November 5, 2004 and related RSM Products. The financial data above has been recast to reflect the results of operations for our continuing operations and, on an aggregated basis, discontinued operations, for the quarterly periods. See also Note 3 - Discontinued Operations.

____________________

(A)    Reclassification of Continuing and Discontinued Operations - The Company reclassified the financial data for continuing operations and, on an aggregated basis, discontinued operations, for all quarterly periods presented and corrected certain scrivener’s errors. The aggregate quarterly financial data of the Company was not affected by the reclassification. For 2004, the reclassification affected Gross Profit which decreased $1 for March 31 and increased $2 for December 31; Operating Loss decreased $18,568 for September 30; Loss from Discontinued Operations increased $18,568 for September 30; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, decreased $.001 for March 31 and September 30; and for Discontinued Operations, decreased $.002 for March 31, $.001 for June 30, increased $.001 for September 30, and decreased $.001 for December 31. For 2003, the reclassification affected Operating Loss which decreased $81,774 for March 31 and $44,737 for June 30, increased $112,653 for September 30, and decreased $186,888 for December 31; Loss from Discontinued Operations which increased $125,834 for March 31 and $95,777 for June 30, decreased $55,002 for September 30, and increased $34,137 for December 31; Net Loss increased $44,060 for March 31, $51,040 for June 30, $57,651 for September 30, and decreased $152,751 for December 31; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, increased $.040 for March 31, $.073 for June 30, $.033 for September 30, and $.064 for December 31; and for Discontinued Operations, increased $.049 for March 31 and $.113 for June 30, and decreased $.002 for September 30 and $.145 for December 31.

(B)    Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - After the reclassification described in paragraph (A) above, the Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in the Selling, General and Administrative line item and included these amounts in the Cost of Sales line item for 2004 and 2003. The aggregate quarterly financial data of the Company was not affected by the reclassification. For 2004, the reclassification affected Gross Profit which decreased $14,649 for March 31, $28,155 for June 30, $33,137 for September 30, and $45,780 for December 31. For 2003, the reclassification affected Gross Profit which decreased $17,375 for March 31, $11,218 for June 30, $25,416 for September 30, and $20,877 for December 31.

(C)   Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- After the reclassifications described in paragraphs (A) and (B) above, the Company restated the Allowance for Doubtful Accounts provision originally included in the Consolidated Balance Sheets and related Bad Debt expense originally included in the Selling, General and Administrative line item in the Consolidated Statement of Operations, retroactively for 2004 and 2003. The aggregate quarterly financial data of the Company was affected by the restatement. For 2004, the restatement affected Operating Loss and Net Loss which each increased $25,044 for March 31, decreased $23,378 for June 30, and increased $25,774 for September 30 and $115,812 for December 31; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, decreased $.001 for June 30, and increased $.001 for September 30 and $.004 for December 31. For 2003, the restatement affected Operating Loss and Net Loss which each increased $24,215 for March 31, and decreased $24,454 for June 30, $27,318 for September 30 and $83,323 for December 31; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, increased $.002 for March 31, and decreased $.001 for June 30, $.002 for September 30, and $.005 for December 31. No income tax effects were related to this restatement.

F/A-2-23

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 19. Selected Quarterly Financial Data (Unaudited) - continued.

(C) Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- continued.

To illustrate:

For 2004:	3/31/2004			6/30/2004			9/30/2004			12/31/2004
Net Loss (As Previously Reported)	$	(1,690,539	)	$	(1,555,501	)	$	(2,240,140	)	$	(160,216	)
Adjustments		(25,044	)		23,377			(25,774	)		(115,812	)
As Adjusted and Restated	$	(1,715,583	)	$	(1,532,124	)	$	(2,265,914	)	$	(276,028	)

For 2003:	3/31/2003			6/30/2003			9/30/2003			12/31/2003
Net Loss (As Previously Reported)	$	(2,140,727	)	$	(3,736,883	)	$	(1,802,063	)	$	(3,593,411	)
Adjustments		(24,215	)		24,454			27,318			83,323
As Adjusted and Restated	$	(2,164,942	)	$	(3,712,429	)	$	(1,774,745	)	$	(3,510,088	)

(D)   Restatement of Inventory and Cost of Sales- After the reclassifications described in paragraph (A) and (B) and restatement in paragraph (C) above, the Company restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations, retroactively for 2004 and 2003. The aggregate quarterly financial data of the Company was affected by the restatement. For 2004, the restatement affected Gross Profit, Operating Loss and Net Loss which each decreased $8,546 for March 31, $3,587 for June 30, $8,204 for September 30 and $804 for December 31. For 2003, the restatement affected Gross Profit, Operating Loss and Net Loss which each decreased $5,369 for March 31 and $2,192 for June 30, and increased $9,491 for September 30 and $19,842 for December 31; and Net (Loss) Per Share - Basic and Diluted, which, for Continuing Operations, increased $.001 for December 31. No income tax effects were related to this restatement.

To illustrate:

For 2004:	3/31/2004			6/30/2004			9/30/2004			12/31/2004
Net Loss (As Restated per (C))	$	(1,715,583	)	$	(1,532,124	)	$	(2,265,914	)	$	(276,028	)
Adjustments		8,546			3,587			8,204			804
As Adjusted and Restated	$	(1,707,037	)	$	(1,528,537	)	$	(2,257,710	)	$	(275,224	)

For 2003:	3/31/2003			6/30/2003			9/30/2003			12/31/2003
Net Loss (As Restated per (C))	$	(2,164,942	)	$	(3,712,429	)	$	(1,774,745	)	$	(3,510,088	)
Adjustments		5,369			2,192			(9,491	)		(19,842	)
As Adjusted and Restated	$	(2,159,573	)	$	(3,710,237	)	$	(1,784,236	)	$	(3,529,930	)

(E)Loss Per Share and Dividends on Preferred Stock- After the reclassifications and restatement described in (A), (B) and (C) above, the Company added the Dividends on Preferred Stock and Net Loss Available to Common Stockholders amounts to the quarterly presentation and included the recalculated Net (Loss) Per Share - Basic and Diluted amounts in the presentation. For Continuing Operations, the recalculation affected Net Loss Per Share - Basic and Diluted, for 2003, increased $.009 for March 31, $.006 for June 30, $.007 for September 30, and $.008 for December 31. There was no effect to the discontinued operations.

Note 20. Subsequent Events.

(a) Cancellation of Indebtedness

On January 4, 2005, the Company issued 18,181,818 shares of restricted common stock to Richard J. Kurtz, Chairman of the Board, in exchange for his cancellation of $6,000,000 of indebtedness of the Company represented by term loans bearing interest at 9% per annum, which were advanced to the Company and its subsidiaries during the period commencing with the fourth quarter of 2003 to date. The price per share used to determine the number of shares of restricted common stock that Mr. Kurtz was entitled to for this transaction was 110% of the closing price of the Company’s common stock as traded on the American Stock Exchange on January 4, 2005 or $ .33 per share.

(b) Acquisition of LaPolla Industries, Inc.

On January 25, 2005, the Company entered into a Stock Purchase Agreement with LaPolla Industries, Inc., an Arizona corporation (“LaPolla Subsidiary”) and Billi Jo Hagan, Trustee of the Billi Jo Hagan Trust, Dated October 6, 2003, wherein the Company agreed to pay $2 Million in cash and issue thirty four (34) shares of its restricted common stock in exchange for all of the issued and outstanding shares of capital stock of the LaPolla Subsidiary (the “Transaction”) with a closing scheduled on or before February 28, 2005. On February 11, 2005, the parties entered into an Amendment to Stock Purchase Agreement and Closing Statement to close the transaction in accordance with the terms of the Agreement, as amended. The LaPolla Subsidiary, formerly a privately-held company, is located in Tempe, Arizona. The LaPolla Subsidiary has 10 employees. The basic assets of the LaPolla Subsidiary include manufacturing equipment, product formulations, raw material and finished goods inventory, long term employees, customers and vendors, office equipment, accounts receivable, and goodwill. The Chairman of the Board and majority shareholder, Richard J. Kurtz, advanced $2 Million in cash to finance the transaction for the Company. The $2 Million advance was made in the form of a demand loan bearing interest at 9% per annum payable by the Company to Mr. Kurtz.

F/A-2-24

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 20. Subsequent Events - continued.

(c) Long Term Employment Agreements

(i) On January 28, 2005 (the “Effective Date”), Douglas J. Kramer joined the Company as its new President and Chief Operating Officer pursuant to an Executive Employment Agreement (“Agreement”). Under the terms and conditions of the Agreement, Mr. Kramer agreed to work exclusively for the Company for a period beginning on the effective date of this Agreement and ending on January 31, 2007, unless sooner terminated in accordance with the Agreement. The Agreement shall be extended automatically for an additional two (2) year period unless the parties notify each other that such extension shall not take place. In the event of any extension of this Agreement, the terms of his Agreement shall be deemed to continue in effect for the term of such extension. His compensation is comprised of a $50,000 signing bonus, an annual base salary of $300,000, which base salary will automatically increase to $350,000 when he causes certain goals to be met (e.g. revenue and margin), and up to 2 Million shares of restricted common stock, subject to certain Sales Goal Thresholds as set forth in the Agreement being met.

(ii) On February 1, 2005 (the “Effective date”), the Company entered into a new Executive Employment Agreement with its CEO, Michael T. Adams (“Agreement”). Under the terms and conditions of the Agreement, Mr. Adams agreed to work exclusively for the Company for a period of four years beginning on the Effective Date of the Agreement and ending on January 31, 2009, unless sooner terminated in accordance with the Agreement. His compensation is comprised of an annual base salary of $108,750 and up to 1 Million shares of restricted common stock, subject to certain Sales Goal Thresholds as set forth in the Agreement being met by the Company.

(iii) On February 25, 2005 (the “Effective Date”), Charles R. Weeks joined the Company as its new Chief Financial Officer and Corporate Treasurer pursuant to an Employment Agreement (“Agreement”). Under the terms and conditions of the Agreement, Mr. Weeks agreed to work exclusively for the Company for a period beginning on the Effective Date of his Agreement and ending on February 24, 2007, unless sooner terminated in accordance with the Agreement. His compensation is comprised of an annual base salary of $125,000 and 5,000 incentive stock options per year, subject to meeting certain corporate and individual goals and objectives.

Note 21. Reclassifications, Restatement, and Corrections to Previously Issued Financial Statements.

(A)  Reclassification of Continuing and Discontinued Operations - The Company reevaluated the consolidated financial statements and related notes with respect to the manner in which the continuing and discontinued operations were originally presented and determined that certain reclassifications were required to make the presentation conform to applicable accounting principles. The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The Infiniti Subsidiary was acquired effective September 1, 2001. The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to our discontinued operations for the periods presented from the continuing operations. The aggregate financial data originally presented was not affected by the reclassification. The Company reclassified the financial data for all periods presented.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Consolidated Statements of Operations with respect to the manner in which other similarly situated public companies, like LaPolla, record certain direct labor expenses, shipping and handling costs, and warehousing costs and determined that certain reclassifications were required to make the Company’s Consolidated Statements of Operations comparable to other similarly situated public companies. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight), and warehousing costs originally included in the Selling, General and Administrative line item on the Consolidated Statements of Operations and included these amounts in the Cost of Sales line item, for the periods presented.

(C)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company reevaluated the consolidated financial statements and related notes with respect to the manner in which the allowance for doubtful accounts was calculated and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. As described in paragraph (A) above, the Company discontinued certain operations, one of which was the operations of its wholly-owned subsidiary RSM Technologies, Inc. (“RSM Subsidiary”), on November 5, 2004. The RSM Subsidiary’s operations related to the former RSM Products, which products were initially distributed through the Infiniti Subsidiary. The Infinity Subsidiary also distributed its own Infiniti Products. The Infiniti Subsidiary’s accounting policy with respect to the method and percentages used to determine the valuation allowance for uncollectible receivables was based primarily on the historical data relating to bad debts and credit sales of the former RSM products. The Company, after reclassifying the financial data relating to the discontinued operations from the continuing operations as described in paragraph (A), reevaluated the historical data relating to bad debts and credit sales for the Infiniti Products and determined a change in method and percentages used to calculate the valuation allowance for uncollectible receivables was required. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company changed the method from the aging method to the percentage-of-sales method and adjusted the percentage used to match the historical data relating to bad debts and credit sales of the Infiniti Products. The Company restated the allowance for doubtful accounts on the Consolidated Balance Sheets and Bad Debt expense included in the Selling, General and Administrative line item on the Consolidated Statements of Operations for the periods presented. To illustrate:

	2004			2003			2002
Net Loss (As Previously Reported)	$	(5,646,396	)	$	(11,273,084	)	$	(10,843,735	)
Adjustments		(143,253	)		110,880			97,232
As Adjusted and Restated	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)

F/A-2-25

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(continued)

Note 21. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements - continued.

(D)  Restatement of Inventory and Cost of Sales- The Company reevaluated the consolidated financial statements and related notes with respect to the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications described in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations for the periods presented. To illustrate:

	2004			2003			2002
Net Loss (As Restated per (C))	$	(5,789,649	)	$	(11,162,204	)	$	(10,746,503	)
Adjustments		21,141			(21,772	)		(73,946	)
As Adjusted and Restated	$	(5,768,508	)	$	(11,183,976	)	$	(10,820,449	)

(E)  Loss Per Share and Dividends on Preferred Stock- The Company reevaluated the Consolidated Statement of Operations with respect to the manner in which the Loss Per Share amounts were originally presented and determined that a change in the presentation was required to make the presentation conform to applicable accounting principles. The Company did not include the Dividends on Preferred Stock amounts on the face of the Consolidated Statement of Operations when these amounts should have been included in the presentation. The Company added the Dividends on Preferred Stock amounts on the face of the Consolidated Statement of Operations for the periods presented. After the reclassifications and restatements described in (A), (B), (C) and (D) above, the Company added the Dividends on Preferred Stock and Net Loss Available to Common Stockholders amounts to the presentation and included the recalculated Net (Loss) Per Share - Basic and Diluted amounts in the presentation. For Continuing Operations, the recalculation affected Net Loss Per Share - Basic and Diluted, on an annual basis, which increased $.034 for 2003 and $.024 for 2002, and decreased $.006 for 2001. There was no effect to discontinued operations.

(F)  Reclassification of Related Party Payable - The Company reevaluated the Consolidated Balance Sheets with respect to the manner in which the Loans Payable - Related Party amounts were originally presented and determined that a reclassification was required to make the presentation conform to applicable accounting principles. The Company classified the Loans Payable - Related Party amounts on the face of the Consolidated Balance Sheets in the Other Liabilities section when these amounts should have been classified in the Current Liabilities section. The aggregate amounts of the Loans Payable - Related Party were not affected by the reclassification. The Company reclassified the Loans Payable - Related Party amounts on the face of the Consolidated Balance Sheets, for the years ended December 31, 2004 and 2003. The Loans Payable - Related Party amount originally presented in the Other Liability section was $5,670,000 for 2004 and $60,000 for 2003.

The Company fully updated all affected portions of these consolidated financial statements and related notes to reflect the reclassifications, restatements and changes described above. In addition, certain scrivener’s errors and captions in the consolidated financial statements and related notes and disclosures have been updated to make the presentation more useful, informative, and comparative.

See also Note 19 - Selected Quarterly Financial Data.

F/A-2-26

Exhibit 31.1-A-2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael T. Adams, Certify That:

1. I have reviewed this amended annual report on Form 10-K/A-2 of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

Exhibit 31.2-A-2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John A. Campbell, Certify That:

1. I have reviewed this amended annual report on Form 10-K/A-2 of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

Exhibit 32-A-2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, in his capacity as an officer of the LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation, (the “Company”) that, to his knowledge, the accompanying amended Annual Report on Form 10-K/A-2 of the Company for the period ended December 31, 2004 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer
		By:
			John A. Campbell
			Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 2

Revised Proposed Amended Form 8-K/A-2 dated February 11, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A-2

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 11, 2005

LaPolla Industries, Inc.

(formerly known as IFT Corporation)

(Exact name of Registrant as Specified in its Charter)

Delaware	001-31354	13-3545304
(State of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Intercontinental Business Park

15402 Vantage Parkway East, Suite 322, Houston, Texas 77032

(Address of Principal Executive Offices and Zip Code)

(281) 219-4700

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

FORM 8-K/A-2

FEBRUARY 11, 2005

INDEX

		Page
SECTION 9	FINANCIAL STATEMENTS AND EXHIBITS	3
Item 9.01	Financial Statements and Exhibits	3
SIGNATURES		4
INDEX OF EXHIBITS		5

2

ITEMS AMENDED HEREBY

As used in this amended report, "LaPolla" and the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc. ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The information presented herein reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation as described above. To be clear, references to this former wholly owned subsidiary are reflected as the “LaPolla Subsidiary”, where applicable, in this presentation to aid the reader in understanding the amended Pro Forma Financial Information.

We are amending our Pro Forma Financial Information with respect to our acquisition of our former LaPolla Subsidiary on February 11, 2005, to: (a) make it clear that the unaudited pro forma consolidated balance sheets are as of December 31, 2004; (b) eliminate the deferred tax asset from the presentation; (c) eliminate the acquisition of the LaPolla Subsidiary’s accumulated deficit from the presentation; (d) make it clear that the unaudited pro forma consolidated statement of operations reflects the acquisition transaction as if it occurred on January 1, 2004; (e) eliminate discontinued operations from the consolidated statement of operations in the presentation; (f) restate certain amounts in the Company’s consolidated financial statements to conform to the Company’s amended presentation for the year ended December 31, 2004 (g) separate customer list and product formulation fair values from goodwill; and (h) consistently present interest expense in the interest expense line item in the presentation.

SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired

N/A

(b) Pro Forma Financial Information

The following pro forma financial information is included herein under Item 9.01(b):

- Unaudited Pro Forma Consolidated Financial Information PF/A-2-1

- Unaudited Pro Forma Consolidated Balance Sheets PF/A-2-2

- Unaudited Pro Forma Consolidated Statements of Operations PF/A-2-3

- Notes to Unaudited Pro Forma Consolidated Financial Information PF/A-2-4

(c) Exhibits

See Exhibit Index.

3

SIGNATURES

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

Date:    March __, 2006	LAPOLLA INDUSTRIES, INC
	(F/K/A IFT CORPORATION)
	Michael T. Adams
	Chief Executive Officer

4

INDEX OF EXHIBITS

Exhibit Number	Description
99.2/A-2	Unaudited Pro Forma Consolidated Financial Information

5

Exhibit 99.2/A-2

UNAUDITED PRO FORMA

CONSOLIDATED FINANCIAL INFORMATION

FOR

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

INDEX TO UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION

	Page
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION	PF/A-2-1
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS	PF/A-2-2
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS	PF/A-2-3
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION	PF/A-2-4

i

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On January 25, 2005, LaPolla Industries, Inc. (f/k/a IFT Corporation and subsidiaries), a Delaware corporation (the “Company”), entered into a Stock Purchase Agreement with the LaPolla Subsidiary (f/k/a LaPolla Industries, Inc.), a privately held Arizona corporation and Billi Jo Hagan, Trustee of the Billi Jo Hagan Trust dated October 6, 2003, wherein the Company agreed to pay $2 Million in cash and shares in exchange for 100% of the issued and outstanding capital stock of the LaPolla Subsidiary. On February 11, 2005, the parties entered into an Amendment to Stock Purchase Agreement and Closing Statement to close the transaction. The acquisition of the LaPolla Subsidiary was accounted for using the purchase method of accounting. The LaPolla Subsidiary is located in Tempe, Arizona and has 10 employees. The LaPolla Subsidiary has provided quality products and roofing solutions to contractors, building owners and design professionals in the Southwestern United States for over 20 years.

The following unaudited pro forma consolidated balance sheets are based on the historical financial statements of the Company as of December 31, 2004 and the LaPolla Subsidiary as of October 31, 2004, after giving effect to the Company’s acquisition of the LaPolla Subsidiary, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma consolidated financial statements, as if it occurred on December 31, 2004.

The unaudited pro forma consolidated statements of operations of the Company and the LaPolla Subsidiary for the years ended December 31, 2004 and October 31, 2004, respectively, are presented as if the acquisition had taken place on January 1, 2004.

The column headed "LaPolla Subsidiary" in the unaudited pro forma statement of operations gives effect to the revenues and expenses of the acquisition for the periods being reported, and was not included in our historical financial statements.

The pro forma financial data are based upon assumptions and include adjustments as explained in the notes to the unaudited pro forma financial statements, and the actual recording of the transactions could differ. The unaudited pro forma financial data are not intended to represent or be indicative of the consolidated results of operations or financial position of the Company that would have been reported had the acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations of the Company.

The unaudited pro forma financial data have been included as required by the rules of the Securities and Exchange Commission and are provided for comparative purposes only. The unaudited pro forma financial data presented are based upon the historical consolidated financial statements of the Company and the LaPolla Subsidiary and should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in its annual reports on Form 10-K and quarterly reports on Form 10-Q, as may be amended from time to time.

PF/A-2-1

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS

							Pro Forma Adjustments
	Company December 31, 2004			LaPolla Subsidiary October 31, 2004			Net Assets Not Acquired			Acquisition Funding/ Adjustments			Pro Forma Consolidated
ASSETS
Current Assets
Cash	$	24,465		$	—		$	—		$	—		$	24,465
Accounts Receivable, Net		691,926			1,334,326			—			—			2,026,252
Inventories		267,995			294,415			—			—			562,410
Deferred Tax Benefit		—			60,000			—			(60,000)	(E)		—
Prepaid Expenses and Other Current Assets		41,053			25,353			—			—			66,406
Current Portion of Assets of Discontinued Operations		438			—			—			—			438
Total Current Assets		1,025,877			1,714,094			—			(60,000	)		2,679,971
Property, Plant and Equipment
Land		—			92,169			(92,169)	(A)		—			—
Building and Improvements		—			424,719			(424,719)	(A)		—			—
Plant and Equipment		595,852			171,394			(48,581)	(A)		—			718,665
Less: Accumulated Depreciation		(308,068	)		(149,600	)		64,429	(A)		—			(393,239	)
Net Property, Plant and Equipment		287,784			538,682			(501,040	)		—			325,426
Other Assets
Intangibles		—			—			—			207,706	(C)		207,706
Acquisition Goodwill		774,000			—			—			1,102,530	(C)		1,876,530
Deposits and Other Non Current Assets		56,471			—			—			—			56,471
Total Other Assets		830,471			—			—			1,310,236			2,140,707
Total Assets	$	2,144,132		$	2,252,776		$	(501,040	)	$	1,250,236		$	5,146,104
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Accounts Payable	$	1,126,847		$	832,517		$	—		$	—		$	1,959,364
Accrued Expenses and Other Current Liabilities		471,008			144,822			—			—			615,830
Bank Overdraft		—			84,633			—			—			84,633
Lines of Credit		219,152			—			—			—			219,152
Loans Payable - Related Parties		5,670,000			244,989			(244,989)	(A)		2,000,000	(B)		7,670,000
Current Portion of Long Term Debt		24,582			511,225			(511,225)	(A)					24,582
Current Portion of Liabilities from Discontinued Operations		1,220,485			—			—			—			1,220,485
Total Current Liabilities		8,732,074			1,818,186			(756,214	)		2,000,000			11,794,046
Other Liabilities
Non Current Portion of Long Term Debt		14,243			—			—			—			14,243
Non Current Portion of Liabilities from Discontinued Operations		525,000			—			—			—			525,000
Reserve for Litigation		15,000			—			—			—			15,000
Total Other Liabilities		554,243			—			—			—			554,243
Total Liabilities		9,286,317			1,818,186			(756,214	)		2,000,000			12,348,289
Stockholders’ Equity (Deficit)
Preferred Stock, $1.00 Par Value:
Series A Convertible		55,035			—			—			—			55,035
Common Stock, $.01 Par Value		320,144			91,563			—			(91,563)	(D)		320,144
Additional Paid-In Capital		53,625,390			—			255,174	(D)		(315,174)	(D)(E)		53,565,390
Accumulated Earnings (Deficit)		(61,142,754	)		343,027			—			(343,027)	(D)		(61,142,754	)
Total Stockholders' Equity (Deficit)		(7,142,185	)		434,590			255,174			(749,764	)		(7,202,185	)
Total Liabilities and Stockholders' Equity	$	2,144,132		$	2,252,776		$	(501,040	)	$	1,250,236		$	5,146,104

The accompanying notes are an integral part of the financial statements.

PF/A-2-2

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

	Company Year Ending December 31, 2004			LaPolla Subsidiary Year Ending October 31, 2004			Pro Forma Expenses			Pro Forma Income (Loss)
Revenue	$	2,564,163		$	7,797,765		$	—		$	10,361,928
Cost of Sales		2,091,931			6,667,172			—			8,759,103
Gross Profit		472,232			1,130,593			—			1,602,825
Operating Expenses		2,707,495			1,379,514			113,967	(G)(I)		4,200,976
Net (Loss) before Other Income (Expense) and Provision for Income Taxes		(2,235,263	)		(248,921	)		(113,967	)		(2,598,151	)
Other Income (Expense)
Customer Finance Charges		—			107,445			—			107,445
Interest Income		—			1,157			—			1,157
Interest (Expense)		(391,912	)		(33,831	)		(180,000)	(F)		(605,743	)
Total Other Income (Expense)		(391,912	)		74,771			(180,000	)		(497,141	)
Net Income (Loss) before Provision for Income Taxes		(2,627,175	)		(174,150	)		(293,967	)		(3,095,292	)
Provision (Benefit) for Income Taxes		—			(60,000	)		60,000	(H)		—
Net Income (Loss) - Continuing Operations	$	(2,627,175	)	$	(114,150	)	$	(353,967	)	$	(3,095,292	)
Net (Loss) Per Share-Basic and Diluted-Continuing Operations	$	(0.091	)							$	(0.107	)
Weighted Average Shares Outstanding		28,866,604									28,866,604

The accompanying notes are an integral part of the financial statements.

PF/A-2-3

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION AND SUBSIDIARIES)

AND

THE LAPOLLA SUBSIIDIARY

(F/K/A LAPOLLA INDUSTRIES, INC.)

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On February 11, 2005, the Company completed the acquisition of the LaPolla Subsidiary. Under the terms of the agreement, the purchase price paid at closing for the LaPolla Subsidiary was $2 Million in cash and a nominal number of shares of restricted common stock. The acquisition was accounted for using the purchase method of accounting. The acquisition was a strategic opportunity for the Company to become an industry leader in the roof coating industry. The transaction was funded through borrowings from our Chairman of the Board.

Assumptions underlying the pro forma adjustments necessary to present this pro forma information are described in notes herein. Discontinued operations and the related (loss) per share data have been excluded from the presentation of the unaudited pro forma consolidated statements of operations pursuant to applicable law.

The following pro forma adjustments are included in the unaudited pro forma consolidated balance sheets:

A. Assets and liabilities retained by shareholder, not transferred.

B. $2 Million loan from related party, at 9% per annum, to purchase the LaPolla Subsidiary.

C. The estimated purchase price and preliminary adjustments to the value of the LaPolla Subsidiary, as a result of the acquisition, are as follows:

Estimated Value of Cash and Common Stock Issued	$	2,000,000
Value of Net Assets Acquired (*)		(689,764	)
Customer List		(69,235	)
Product Formulation		(138,471	)
Total Estimated Goodwill	$	1,102,530

^(*) For the net current and fixed assets acquired, the book value approximated fair market value at acquisition.

D. Acquisition equity eliminations.

E. Elimination of deferred tax benefit of acquired company.

The following pro forma adjustments are included in the unaudited pro forma consolidated statement of operations:

F. Interest on $2,000,000 acquisition debt at 9%.

G. New annual rent expense $100,692, net of depreciation of $9,803 on assets not acquired.

H. Elimination of deferred tax benefit of acquired company.

I. Annual amortization of customer list ($13,847 for 5 years) and product formulation ($9,231 for 15 years)

PF/A-2-4

Exhibit 3

Proposed Amended Form 10-Q/A for March 31, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2005

Commission File No. 001-31354

LaPolla Industries, Inc.

(formerly known as IFT Corporation)

(Exact name of Registrant as Specified in its Charter)

Delaware		13-3545304
(State of Incorporation)		(I.R.S. Employer Identification No.)
Intercontinental Business Park
15402 Vantage Parkway East, Suite 322
Houston, Texas		77032
(Address of Principal Executive Offices)		(Zip Code)
	(281) 219-4700
	(Registrant’s Telephone Number)

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, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of May 12, 2005 there were 50,200,219 shares of Common Stock, par value $.01, outstanding.

ITEMS AMENDED HEREBY

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The information presented herein reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. located in Arizona that was acquired on February 11, 2005 and merged into IFT Corporation as described above. Please find below a description of the items amended hereby:

(A)  Reclassification of Continuing and Discontinued Operations - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the Securities and Exchange Commission (“SEC”) based on guidance received from the SEC regarding the manner in which the continuing and discontinued operations were originally presented and determined that certain reclassifications were required to make the presentation conform to applicable accounting principles. The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The Infiniti Subsidiary was acquired effective September 1, 2001. The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to our discontinued operations from our continuing operations. The aggregate financial data originally presented was not affected by the reclassification.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Condensed Consolidated Statements of Operations as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which other similarly situated public companies, like us, record certain direct labor expenses, shipping and handling costs, and warehousing costs, and determined that certain reclassifications were required to make the Company’s Condensed Consolidated Statements of Operations comparable to other similarly situated public companies. The Company recorded certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs, and warehousing costs as Selling, General and Administrative. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item.

(C)  Restatement of Inventory and Cost of Sales- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC in paragraph (B) above and Accounting Research Bulletin 43, Chapter 4, regarding the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in (A) and (B) above, restated the value of Inventories on the Condensed Consolidated Balance Sheets and Cost of Sales on the Condensed Consolidated Statements of Operations.

(D)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the allowance for doubtful accounts was calculated and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. As described in paragraph (A) above, the Company discontinued certain operations, one of which was its wholly-owned subsidiary RSM Technologies, Inc. (“RSM Subsidiary”), on November 5, 2004. The RSM Subsidiary’s operations related to the former RSM Products, which products were initially distributed through the Infiniti Subsidiary. The Infiniti Subsidiary also distributed its own Infiniti Products. The Infiniti Subsidiary’s accounting policy with respect to the method and percentages used to determine the valuation allowance for uncollectible receivables was based primarily on the historical data relating to bad debts of the former RSM products. The Company acquired LaPolla Industries, Inc., an Arizona corporation, on February 11, 2005 (the “LaPolla Subsidiary”), which adopted the aforementioned Infiniti Subsidiary’s accounting policy to be consistent at the time. The Company, after the reclassifications in paragraph (A) above, reevaluated the historical data relating to bad debts for the Infiniti Products and determined a change in method and percentages used to calculate the valuation allowance for uncollectible receivables was required for the year 2004. The Company changed the method from the aging method to the percentage-of-sales method and adjusted the percentage used to match the historical data relating to bad debts and credit sales of the Infiniti Products for the year 2004. The Company reevaluated the percentage-of-sales method and percentage used for the 2004 year again for the first quarter of 2005 against the historical data relating to bad debts and credit sales of the Infiniti Products and LaPolla Products and determined that the 2004 year criteria was also appropriate for the first quarter of 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C), restated the allowance for doubtful accounts on the Condensed Consolidated Balance Sheets and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations.

(E)   Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which goodwill was recorded in connection with the LaPolla Subsidiary acquisition and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. In connection with the acquisition of the LaPolla Subsidiary, the Company acquired a customer list and product formulation which assets were included in the aggregate value of goodwill attributable to the transaction, when they should have been valued separately, disaggregated from goodwill, treated as other intangible assets, and amortized according to their estimated useful lives. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C) and (D), separately valued the customer list and product formulation, disaggregated these values from the goodwill and identified them as other intangible assets on the Condensed Consolidated Balance Sheets, established useful lives, and recorded amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations.

The Company has fully updated all affected portions of this amended report, including the condensed consolidated financial statements and related notes and MD&A, to reflect the reclassifications and restatements described above. In addition, certain scrivener’s errors and captions in the condensed consolidated financial statements and related notes and disclosures have been updated throughout this amended report to make the presentation more useful, informative, transparent, and comparative.

A-2

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

FORM 10-Q/A

FOR THE QUARTER ENDED MARCH 31, 2005

INDEX

			Page
PART I		FINANCIAL INFORMATION
	Item 1	Financial Statements	A-4
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	A-12
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	A-15
	Item 4	Controls and Procedures	A-15
PART II		OTHER INFORMATION
	Item 1	Legal Proceedings	A-15
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	A-15
	Item 3	Defaults Upon Senior Securities	A-15
	Item 4	Submission of Matters to a Vote of Security Holders	A-15
	Item 5	Other Information	A-15
	Item 6	Exhibits	A-15
SIGNATURES			A-16
INDEX OF EXHIBITS			A-17

A-3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

INDEX TO FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES

CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31, 2005 (Unaudited) and December 31, 2004	A-5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended March 31, 2005 and 2004	A-6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Three Months Ended March 31, 2005 and 2004	A-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		A-8

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.

A-4

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2005			2004
	Restated			Restated
	(Unaudited)
ASSETS
Current Assets:
Cash	$	121,547		$	24,465
Trade Receivables, Net		2,638,344			691,926
Inventories		628,728			267,995
Prepaid Expenses and Other Current Assets		128,386			41,053
Current Portion of Assets of Discontinued Operations		199			438
Total Current Assets		3,517,204			1,025,877
Property, Plant and Equipment, Net		352,202			287,784
Other Assets:
Goodwill and Other Intangible Assets, Net		2,156,783			774,000
Deposits and Other Non-Current Assets		58,444			56,471
Total Other Assets		2,215,227			830,471
Total Assets	$	6,084,633		$	2,144,132
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities:
Accounts Payable	$	3,013,366		$	1,126,847
Accrued Expenses and Other Current Liabilities		455,232			471,008
Line of Credit		158,218			219,152
Loans Payable - Related Party		3,164,407			5,670,000
Current Portion of Long-Term Debt		20,993			24,582
Current Portion of Liabilities from Discontinued Operations		1,435,285			1,220,485
Total Current Liabilities		8,247,501			8,732,074
Other Liabilities
Non Current Portion of Long-Term Debt		8,169			14,243
Non Current Portion of Liabilities from Discontinued Operations		525,000			525,000
Reserve for Litigation		15,000			15,000
Total Other Liabilities		548,169			554,243
Total Liabilities		8,795,670			9,286,317
Stockholders’ (Deficit):
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of which Designations:
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued and Outstanding (Less Offering Costs of $7,465) at March 31, 2005 and December 31, 2004; $62,500 aggregate liquidation preference at March 31, 2005 and December 31, 2004		55,035			55,035
Common Stock, $.01 Par Value; 60,000,000 Shares Authorized; 50,200,219 and 32,014,369 Issued and Outstanding at March 31, 2005 and December 31, 2004, Respectively		502,002			320,144
Additional Paid-In Capital		59,445,554			53,625,390
Accumulated (Deficit)		(62,713,628	)		(61,142,754	)
Total Stockholders’ (Deficit)		(2,711,037	)		(7,142,185	)
Total Liabilities and Stockholders’ (Deficit)	$	6,084,633		$	2,144,132

See accompanying notes to condensed consolidated financial statements.

A-5

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,
	2005			2004
	Restated			Restated
Sales:
Coatings, Sealants and Other Products	$	2,457,653		$	460,897
Total Sales		2,457,653			460,897
Cost of Sales:
Coatings, Sealants and Other Products		2,204,993			356,625
Total Cost of Sales		2,204,993			356,625
Gross Profit		252,660			104,272
Operating Expenses:
Selling, General and Administrative		1,089,502			537,770
Professional Fees		266,495			114,148
Depreciation and Amortization		22,559			20,370
Consulting Fees		61,382			10,213
Interest Expense		17,840			28,725
Interest Expense - Related Party		38,650			14,486
Other (Income) Expense		—			668
Total Operating Expenses		1,496,428			726,380
Operating (Loss)		(1,243,768	)		(622,108	)
(Loss) From Discontinued Operations		(327,105	)		(1,084,929	)
Net (Loss)	$	(1,570,873	)	$	(1,707,037	)
Net (Loss) Per Common Share-Basic and Diluted:
Continuing Operations	$	(0.025	)	$	(0.021	)
Discontinued Operations		(0.006	)		(0.037	)
Total	$	(0.031	)	$	(0.058	)
Weighted Average Shares Outstanding		49,792,164			28,833,543

____________________

(A)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the quarter ended March 31, 2005. The reclassification affected Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales which each increased $131,886; Gross Profit decreased $131,886; Selling, General and Administrative decreased $126,087; Depreciation and Amortization decreased $5,799; and Total Operating Expenses decreased $131,886.

(B)  Restatement of Inventory and Cost of Sales - The Company, after the reclassification in paragraph (A) above, restated the value of Inventories on the Consolidated Balance Sheets and Cost of Sales on the Consolidated Statements of Operations for the quarter ended March 31, 2005. Inventories, Total Current Assets, and Total Assets each increased $49,951; and Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales each decreased $30,995; Gross Profit increased $30,995; and Operating Loss and Net Loss each decreased $30,995. No income tax effects were related to this restatement. See Note 17, paragraph (C) for illustrative requirement.

(C)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassification in paragraph (A) and restatement in paragraph (B) above, restated the Allowance for Doubtful Accounts for the quarter ended March 31, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three months ended March 31, 2005. Allowance for Doubtful Accounts decreased $23,382; Total Current Assets and Total Assets each increased $23,382; and Selling, General and Administrative, Operating Loss, and Net Loss each decreased $23,382. No income tax effects were related to this restatement. See Note 17, paragraph (D) for illustrative requirement.

(D)  Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company, after the reclassification in paragraph (A) and restatements in paragraphs (B) and (C) above, separately valued the customer list and product formulation acquired with the LaPolla Subsidiary, disaggregated these values from Goodwill and identified them as Other Intangible Assets, and recorded Amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations for the quarter ended March 31, 2005. Goodwill and Other Intangible Assets, Net, Total Other Assets, and Total Assets each decreased $1,923; and Depreciation and Amortization, Operating Loss, and Net Loss each increased $1,923. No income tax effects were related to this restatement. See Note 17, paragraph (E) for illustrative requirement.

See accompanying notes to condensed consolidated financial statements

A-6

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2005			2004
	Restated			Restated
Cash Flows From Operating Activities
Net (Loss)
Continuing Operations	$	(1,243,769	)	$	(622,108	)
Discontinued Operations		(327,105	)		(1,084,929	)
Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) by Operating Activities:
Depreciation and Amortization		28,358			20,370
Provision for Losses on Trade Receivables		—			—
Stock Based Operating Expenses:
Other Compensation		2,000			6,370
Changes in Assets and Liabilities, Net of Effects from Purchase of LaPolla Subsidiary
Trade Receivables		(434,206	)		37,024
Inventories		(49,163	)		(20,934	)
Prepaid Expenses and Other Current Assets		(81,832	)		(197,090	)
Deposits and Other Non Current Assets		5,168			(219	)
Accounts Payable		718,366			(47,096	)
Accrued Expenses and Other Current Liabilities		124,757			77,995
Reserve for Litigation		—			15,000
Net Operating Activities of Discontinued Operations		215,239			528,521
Net Cash (Used in) Operating Activities		(1,042,187	)		(1,286,428	)
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment	$	(45,610	)	$	(54,379	)
Payment for Purchase of LaPolla Subsidiary, Net of Cash Acquired		(1,931,825	)		—
Net Investing Activities of Discontinued Operations		—			—
Net Cash Provided by (Used in) Investing Activities		(1,977,435	)		(54,379	)
Cash Flows From Financing Activities
Proceeds from the Issuance of Stock	$	—		$	—
Proceeds from Lines of Credit		1,039			3,874
Payments on Lines of Credit		(61,973	)		(3,500	)
Proceeds from Loans Payable - Related Party		3,187,500			1,370,000
Principal Repayments on Long Term Debt		(9,079	)		(1,351	)
Principal Payments under Capital Lease Obligation		(584	)		(220	)
Net Financing Activities of Discontinued Operations		—			(9,927	)
Net Cash Provided by Financing Activities		3,116,903			1,358,876
Net Increase In Cash	$	97,281		$	17,709
Cash at Beginning of Period		24,465			35,385
Cash at End of Period	$	121,746		$	53,094
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Income Taxes	$	—		$	—
Cash Payments for Interest	$	17,841		$	32,641
Supplemental Schedule of Non Cash Investing and Financing Activities
Property, Plant and Equipment acquired via a Capital Lease Obligation	$	-		$	—
Property, Plant and Equipment acquired via issuance of Long Term Debt		-			—
Common Stock issued as Other Compensation pursuant to Employment Agreements		2,000			6,370
Common Stock issued in connection with Acquisition of Business Entity		22			—
Common Stock issued upon Cancellation of Indebtedness	$	6,000,000		$	—

____________________

(See also Note 2 - Reclassifications and Changes in Presentation)

See accompanying notes to condensed consolidated financial statements.

A-7

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Basis of Presentation.

Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The unaudited condensed consolidated financial statements and related notes reflect the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation subsequent to the current period. To be clear, references to the former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this presentation to aid the reader in understanding the current period presentation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. The financial statements reflect, in the opinion of management, all material adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position and results of operations. The results of operations and cash flows for the three months ended March 31, 2005 are not necessarily indicative of the results of operations or cash flows, which may result for the remainder of 2005. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, including any amendments thereto, as filed with the Securities and Exchange Commission.

Note 2. Reclassifications and Changes in Presentation.

Certain amounts in the prior years have been reclassified to conform to the 2005 unaudited condensed consolidated financial statement presentation. The Company has separately disclosed the operating, investing and financing portion of the cash flows attributable to its discontinued operations.

Note 3. Going Concern.

While the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. The Company has experienced significant recurring operational losses and negative cash flows from operations, and at March 31, 2005 has an accumulated deficit, net of dividends, of $62,713,628, a working capital deficit of $4,730,297 and its total liabilities exceeded its total assets by $2,711,037. These factors raise doubt about the Company’s ability to continue as a going concern. The Company has relied principally on non-operational sources of financing, mainly from Richard J. Kurtz, Chairman of the Board (“Chairman”), to fund its operations over the past six years (See Note 11 - Cancellation of Indebtedness). Although the Company has no formal commitment from the Chairman to fund the Company’s operating requirements for the year 2005, the Company has received loans, during the period January 1, 2005 through March 31, 2005, aggregating $3,187,500 from the Chairman, of which $2,000,000 was for the acquisition of the LaPolla Subsidiary on February 11, 2005, and the remaining $1,187,500 for operational costs during the first quarter of 2005. The Company’s ability to continue as a going concern will be dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while decreasing operating costs and expenses, as well as, increasing operational cash flow, continued funding of the Company’s operations by the Chairman, and obtaining additional funding from private placements of debt and/or equity securities. If management in unsuccessful is obtaining one or more of the above mentioned goals, the Company’s ability to continue as a going concern would be adversely impacted. These financial statements do not include adjustments or disclosures that may result from the Company’s inability to continue as a going concern.

Note 4. Trade Receivables.

Trade receivables are comprised of the following:

	March 31, 2005			December 31, 2004
Trade Receivables	$	2,651,165		$	704,747
Less: Allowance for Doubtful Accounts		(12,821	)		(12,821	)
Trade Receivables, Net	$	2,638,344		$	691,926

Note 5. Inventories.

Inventories are comprised of the following:

	March 31, 2005		December 31, 2004
Raw Materials	$	169,757	$	65,920
Finished Goods		458,971		202,074
Total	$	628,728	$	267,995

Note 6. Property, Plant and Equipment.

Property, Plant and Equipment are comprised of the following:

	March 31, 2005			December 31, 2004
Vehicles	$	155,618		$	137,822
Leasehold Improvements		8,135			62,278
Office Furniture and Equipment		92,988			70,195
Computers and Software		206,078			192,284
Displays		62,278			—
Machinery and Equipment		239,886			133,273
Total Property, Plant and Equipment	$	764,983		$	595,852
Less: Accumulated Depreciation		(412,781	)		(308,068	)
Total Property, Plant and Equipment, Net	$	352,202		$	287,784

A-8

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED- CONTINUED)

Note 7 Acquisition

On January 25, 2005, the Company entered into a Stock Purchase Agreement with LaPolla Industries, Inc., an privately held Arizona corporation (“LaPolla Subsidiary”) and Billi Jo Hagan, Trustee of the Billi Jo Hagan Trust, Dated October 6, 2003, wherein the Company agreed to pay $2 Million in cash and issue thirty four shares of restricted common stock in exchange for 100% of the issued and outstanding capital stock of the LaPolla Subsidiary with a closing scheduled on or before February 28, 2005. On February 11, 2005, the parties entered into an Amendment to Stock Purchase Agreement and Closing Statement to close the transaction in accordance with the terms of the Agreement, as amended. The LaPolla Subsidiary is located in Tempe, Arizona and has 10 employees. The LaPolla Subsidiary has provided quality products and roofing solutions to contractors, building owners and design professionals in the Southwestern United States for over 20 years. The basic assets of the LaPolla Subsidiary include manufacturing equipment, product formulations, raw material and finished goods inventory, long term employees, customers and vendors, office equipment, accounts receivable, and goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.

	At February 11, 2005
Current Assets	$	1,904,599
Property, Plant and Equipment		45,243
Intangible Assets		207,706
Goodwill		1,177,000
Total Assets Acquired		3,334,548
Current Liabilities		(1,334,526	)
Total Liabilities Assumed		(1,334,526	)
Net Assets Acquired	$	2,000,022

Of the $207,706 of acquired other intangible assets, $69,235 was assigned to a customer list with a useful life of five (5) years and $138,471 was assigned to product formulation with a useful life of 15 years. The $1,177,000 of goodwill, as well as the $207,706 of other intangible assets, was assigned to the LaPolla Products segment.

The unaudited pro forma statements of operations for the quarter ended March 31, 2005 gives effect to the acquisition by the Company of the LaPolla Subsidiary as if it had occurred on January 1, 2005. The columns headed "LaPolla Subsidiary" in the below table gives effect to the revenues and expenses related to the acquisition for the periods indicated. The LaPolla Subsidiary column for the period from January 1, 2005 through February 10, 2005 was not included in our historical financial statements. The purchase was accounted for by using the purchase method of accounting.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Company Quarter Ending March 31, 2005			LaPolla Subsidiary Period From 1/1/05 to 2/10/05			LaPolla Subsidiary Period From 2/11/05 to 3/31/05			Pro Forma Income (Loss) March 31, 2005
Revenues	$	799,815		$	777,166		$	1,657,838		$	3,234,819
Cost of Sales		635,384			615,862			1,569,609			2,820,855
Gross Profit		164,431			161,304			88,229			413,964
Operating Expenses		1,027,009			326,402			495,361			1,919,686
Operating (Loss) before Other Income (Expenses)		(832,151	)		(165,098	)		(411,617	)		(1,408,866	)
Other Income (Expense)		—			15,603			—			15,603
Operating (Loss)	$	(832,151	)	$	(149,495	)	$	(411,617	)	$	(1,393,263	)

____________________

*The total proceeds paid for the LaPolla Subsidiary was $2,000,022 in cash and restricted common stock. The goodwill recognized from the acquisition was $1,177,000, which is the difference between the purchase price and the net assets of the LaPolla Subsidiary of $823,022. The pro forma above does not include any financial data relating to discontinued operations.

Note 8. Goodwill and Other Intangible Assets.

Goodwill

	March 31, 2005		December 31, 2004
Infiniti Acquisition	$	774,000	$	774,000
LaPolla Acquisition		1,177,000		—
	$	1,951,000	$	774,000

Other Intangible Assets

	March 31, 2005
	Gross		Accumulated			Amortization
	Amount		Amortization			Period
Customer List	$	69,235	$	(1,154	)		5 Years
Product Formulation		138,471		(769	)		15 Years
	$	207,706	$	(1,923	)

The Customer List and Product Formulation were acquired in connection with the acquisition of the LaPolla Subsidiary.

A-9

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 9. Line of Credit.

Line of credit is comprised of the following:

	March 31, 2005		December 31, 2004
$180,000 Line of Credit, maturing December 31, 2005, bears interest at prime plus 1% per annum, secured by all the assets of the Infiniti Subsidiary and a personal guarantee from the Chairman of the Board.	$	158,218	$	219,152

Note 10. Loans Payable - Related Party.

Loans payable - related party is comprised of funds loaned to the Company, for working capital and other corporate purposes, from the Chairman. These loans are payable upon demand, unsecured and bear interest at 9% per annum. During the period from January 1, 2005 to March 31, 2005 the Chairman loaned the Company funds aggregating $3,187,500, of which $2,000,000 was used for the acquisition of the LaPolla Subsidiary on February 11, 2005, and the remaining $1,187,500 for operational costs during the first quarter.

Note 11. Cancellation of Indebtedness.

On January 4, 2005, the Company issued 18,181,818 shares of restricted common stock to the Chairman of the Board, in exchange for his cancellation of $6,000,000 of indebtedness represented by short term loans bearing interest at 9% per annum, which were advanced to the Company and its subsidiaries for working capital and other corporate purposes. The price per share used to determine the number of shares of restricted common stock for this transaction was 110% of the closing price of the Company’s common stock as traded on the American Stock Exchange on January 4, 2005 or $ .33 per share.

Note 12. Net Loss Per Common Share - Basic and Diluted.

The following table reflects the computation of the basic and diluted net loss per common share:

	Three Months Ended March 31,
	2005						2004
				Per Share						Per Share
	Amount			Amount			Amount			Amount
Operating (Loss)	$	(1,243,768	)	$	(0.025	)	$	(622,108	)	$	(0.021	)
(Loss) from Discontinued Operations		(327,105	)		(0.006	)		(1,084,929	)		(0.037	)
Net (Loss)	$	(1,570,873	)	$	(0.031	)	$	(1,707,037	)	$	(0.058	)
Weighted Average Common Shares Outstanding		49,792,164						28,833,543

Basic and diluted net loss per common share are the same since (a) the Company has reflected net losses from continuing operations for all periods presented and (b) the potential common shares of the Company would be anti-dilutive.

Note 13. Discontinued Operations.

On November 5, 2004, the Company discontinued the operations of its RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). The condensed consolidated financial statements and the related notes have been recast to reflect the financial position, results of operations and cash flows on an aggregated basis for the RSM Subsidiary.

The assets and liabilities of the discontinued operations presented on an aggregated basis in the Condensed Consolidated Balance Sheets consist of the following at:

Assets	March 31, 2005		December 31, 2004
Cash	$	199	$	438
Total Assets	$	199	$	438
Liabilities
Accounts Payable	$	568,081	$	662,696
Accrued Expenses and Other Current Liabilities		367,286		57,871
Line of Credit		499,918		499,918
Reserve for Litigation		525,000		525,000
Total Liabilities	$	1,960,285	$	1,745,485

A-10

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 14. Business Segment Information.

Effective January 1, 2005, the Company determined that it had three distinct business segments. These three business segments were defined as Corporate, Infiniti Products and LaPolla Products. The business segment financial data reflected in the table below was derived from the Company’s condensed consolidated financial position and condensed consolidated results of operations as follows:

(i) Corporate was derived from the financial data of the Company;

(ii) Infiniti Products was derived from the financial data of the Infiniti Subsidiary.

(iii) LaPolla Products was derived from the financial data of the LaPolla Subsidiary.

The following table reflects certain business segment financial data as of and for the three months ended March 31, 2005:

	Corporate			Infiniti Products			LaPolla Products			Total
Revenue	$	---		$	799,815		$	1,657,838		$	2,457,653
Gross Profit	$	---		$	164,431		$	88,229		$	252,660
Operating (Loss)	$	(661,484	)	$	(170,667	)	$	(411,617	)	$	(1,243,768	)
Capital Expenditures (Net of Capital Leases)	$	10,764		$	25,104		$	9,742		$	45,610
Depreciation and Amortization Expense	$	15,780		$	2,235		$	2,621		$	22,559
Identifiable Assets	$	2,386,852		$	1,221,007		$	2,476,774		$	6,084,633

On November 5, 2004, the Company discontinued the operations of its RSM Subsidiary and the related business segment, formerly reflected as RSM Products, was eliminated at that time. The table above does not include any financial data relating to the discontinued RSM Products business segment, which is reported as discontinued operations in the Company’s financial statements. See alsoNote 13 - Discontinued Operations.

Note 15. Commitments and Contingencies.

Reserve

	March 31, 2005		December 31, 2004
Accounts Payable - Discontinued Operations	$	568,081	$	662,696
Accrued Expenses and Other Current Liabilities - Discontinued Operations		367,286		57,871
Line of Credit - Discontinued Operations		499,918		499,918
Reserve for Litigation - Discontinued Operations		525,000		525,000
Reserve for Litigation - Current Operations		15,000		15,000
Total	$	1,975,285	$	1,760,485

Note 16. Subsequent Events.

(a)   Effective April 1, 2005, Infiniti Products, Inc., a Florida corporation (“Infiniti Subsidiary”), merged with and into LaPolla Industries, Inc., an Arizona corporation (“LaPolla Subsidiary”), whereupon the separate existence of the Infiniti Subsidiary ceased and the LaPolla Subsidiary, continued as the surviving corporation.

Note 17. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements.

(A)  Reclassification of Continuing and Discontinued Operations - The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to the Company’s discontinued operations from its continuing operations. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (A) for more information.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the three months ended March 31, 2005. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (B) for more information.

(C)  Restatement of Inventory and Cost of Sales - The Company, after the reclassifications in paragraph (A) and (B) above, restated the value of Inventories on the Consolidated Balance Sheets for the quarter ended March 31, 2005 and Cost of Sales on the Consolidated Statements of Operations for the three months ended March 31, 2005. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended March 31, 2005
Net Loss (As Previously Reported)	$	(1,623,327	)
Adjustments		30,995
As Adjusted and Restated	$	(1,592,332	)

See also Page A-2 - Items Amended Hereby, paragraph (C) for more information.

A-11

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 17. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements - continued.

(D)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the Allowance for Doubtful Accounts for the quarter ended March 31, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three months ended March 31, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended March 31, 2005
Net Loss (As Restated Per (C))	$	(1,592,332	)
Adjustments		23,382
As Adjusted and Restated	$	(1,568,950	)

See also Page A-2 - Items Amended Hereby, paragraph (D) for more information.

(E)   Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C) and (D) above, separately valued the customer list and product formulation acquired with the LaPolla Subsidiary, disaggregated these values from Goodwill and identified them as Other Intangible Assets, for the quarter ended March 31, 2005, and recorded Amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations, for the three months ended March 31, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended March 31, 2005
Net Loss (As Restated Per (D))	$	(1,568,950	)
Adjustments		(1,923	)
As Adjusted and Restated	$	(1,570,873	)

See also Page A-2 - Items Amended Hereby, paragraph (E) for more information.

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

Management’s Discussion and Analysis

of Financial Condition and Results of Operations for the Three Months Ended March 31, 2005 and 2004

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, and its subsidiaries, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The financial review reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation immediately after the end of the third quarter of 2005. To be clear, references to this former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this review to aid the reader in understanding the current period review. The financial review below presents our operating results for the three months ended March 31, 2005 and 2004, and our financial condition at March 31, 2005. Except for the historical information contained herein, the following discussion contains forward-looking statements, which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this amended report and specifically under the caption “Forward Looking Statements” below. In addition, the following review should be read in conjunction with the information presented in our unaudited condensed consolidated financial statements and related notes for the three months ended March 31, 2005 above.

Overview

We are a publicly traded holding company focused on acquiring and developing companies that operate in the coatings, paints, foams, sealants, and adhesives markets. We operated two wholly-owned subsidiaries, Infiniti Products, Inc. (“Infiniti Subsidiary”) and the LaPolla Subsidiary in the first quarter of 2005. The Infiniti Subsidiary markets, sells, manufactures and distributes acrylic roof coatings, roof paints, sealers, and roofing adhesives to the home improvement retail and polyurethane foam systems to the industrial/commercial construction industries (“Infiniti Products”). We acquired 100% of the capital stock of the LaPolla Subsidiary on February 11, 2005 for $2 Million in cash and thirty four shares of restricted common stock. The LaPolla Subsidiary markets, sells, manufactures and distributes acrylic roof coatings, sealers, and polyurethane foam systems to the industrial/commercial construction industries (“LaPolla Products”). The LaPolla Subsidiary is located in Tempe, Arizona and has 10 employees and has provided quality products and roofing solutions to contractors, building owners and design professionals in the Southwestern United States for over 20 years. The basic assets of the LaPolla Subsidiary include manufacturing equipment, product formulations, raw material and finished goods inventory, long term employees, customers, vendors, office equipment, accounts receivable, and goodwill.

On November 5, 2004, pursuant to resolution of the Board of Directors, we discontinued the operations of our RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). Our condensed consolidated financial statements and related notes have been recast to reflect the financial position, results of operations and cash flows of the RSM Subsidiary as a discontinued operation.

We operated our business on the basis of three reportable segments, which we refer to as Corporate, Infiniti Products and LaPolla Products, during the first quarter of 2005. LaPolla Products and Infiniti Products are collectively referred to as “Coatings, Sealants and Other Products” in our condensed consolidated financial statements.

A-12

Results of Operations

Revenues

The following is a summary of our revenue:

	Three Months Ended
	March 31, 2005		March 31, 2004
Revenue:
Coatings, Sealants and Other Products	$	2,457,653	$	460,897
Total Revenue	$	2,457,653	$	460,897

We recognized revenue for the three months ended March 31, 2005 of $2,457,653 as compared to $460,897 for the three months ended March 31, 2004, which represents an increase of $1,996,756. The revenue generated from the sale of Coatings, Sealants and Other Products represents 100% of total revenue, respectively, for the three months ended March 31, 2005 and March 31, 2004. The increase in revenue of $1,996,756 is primarily attributable to: (a) the acquisition of the LaPolla Subsidiary on February 11, 2005, which had revenue totaling $1,657,838 for the interim period February 11, 2005 through March 31, 2005, and (b) Infiniti Products revenue totaling $799,815 for the three months ended March 31, 2005, as compared to $460,897 for the three months ended March 31, 2004.

Cost of Sales

Our cost of sales for the three months ended March 31, 2005 was $2,204,993 as compared to $356,625 for the three months ended March 31, 2004. The cost of sales as a percentage of our revenue for Coatings, Sealants and Other Products was 89.7%for the three months ended March 31, 2005 as compared to 77.3% for the three months ended March 31, 2004. The increase in the total cost of sales of $1,848,368 was primarily attributable to: (a) the acquisition of LaPolla Products, of which $1,569,609 was the cost of sales for the period February 11, 2005 through March 31, 2005, and (b) the cost of sales for Infiniti Products increased $278,759 from $356,625 for the three months ended March 31, 2004 as compared to $635,384 for the three months ended March 31, 2005. Infiniti Products cost of sales as a percentage of revenue for Coatings, Sealants and Other Products was 79.4% and 77.3%, respectively, as of March 31, 2005 and March 31, 2004. This increase in cost of sales as a percentage of revenue is attributable to ramping up full scale manufacturing operations for our Infiniti Products in Florida. LaPolla Products cost of sales as a percentage of revenue for Coatings, Sealants and Other Products was 94.6% for the three months ended March 31, 2005. This high percentage was mainly attributable to former unprofitable customers, for which we have either increased selling prices or eliminated from our customer base.

Operating Expenses

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended March 31, 2005 was $1,089,502 as compared to $537,770 for the three months ended March 31, 2004. The increase of $551,732 is primarily attributable to (a) the acquisition of LaPolla Products, including the additional operating overhead absorbed from the new location in Tempe, Arizona, (b) the addition of a new sales and marketing team, which attributed to the rise in our sales during the first quarter of 2005, (c) design and printing of marketing materials, (d) attendance at two of the largest trade shows specific to the roof coating industry, (e) additional travel expenses to obtain new and maintain existing customers, and (f) opening a new sales and marketing office in Texas.

Professional Fees

Our professional fees for the three months ended March 31, 2005 were $266,495 as compared to $114,148 for the three months ended March 31, 2004. The increase of $152,347 is primarily attributable to attorney’s fees associated with past and current litigation, as well as auditing and accounting fees associated with the acquisition of LaPolla Products.

Depreciation and Amortization

For the three months ended March 31, 2005, our depreciation and amortization expense was $22,559 as compared to $20,370 for the three months ended March 31, 2004. The increase of $2,189 is primarily attributable to the acquisition of LaPolla Products, which resulted in the purchase of additional assets and machinery and equipment.

Research and Development

We did not incur any research and development costs in the three months ended March 31, 2005 or March 31, 2004.

Consulting Fees

Our consulting fees for the three months ended March 31, 2005 were $61,382 as compared to $10,213 for the three months ended March 31, 2004. The increase of $51,169 is primarily attributable to an increase in the number and type of consultants engaged to provide business and financial consulting services for us.

Interest Expense

For the three months ended March 31, 2005, our interest expense was $56,490 as compared to $43,211 for the three months ended March 31, 2004. The increase of $13,279 is primarily attributable to the interest incurred on the $3,164,407 of loans payable - related party originated during the quarter ended March 31, 2005. These loans are payable to the Chairman and bear interest at 9% per annum.

Discontinued Operations

The loss from discontinued operations for the three months ended March 31, 2005 reflects a $327,105 loss from our discontinued RSM Products as compared to $1,084,929 for the three months ended March 31, 2004. The $327,105 loss for the three months ended March 31, 2005 is primarily attributable to an increase in our commitments and contingencies related to the discontinued operations in 2004.

A-13

Financial Condition, Liquidity and Capital Resources

We assess our liquidity by our ability to generate cash to fund our operations. Significant factors in the management of liquidity are:

funds generated by operations; levels of accounts receivable, inventories, accounts payable and capital expenditures; funds required for acquisitions; adequate credit facilities; and financial flexibility to attract long-term capital on satisfactory terms. Historically, we have generated insufficient cash from operations to meet our working capital requirements and have relied principally on related party funding from our Chairman over the past six years and outside investors to meet our working capital and other corporate needs. With the discontinuation of our RSM Products, increased focus on our Infiniti Products and acquisition of LaPolla Products, in conjunction with our retention of additional sales and marketing personnel, we are getting closer to generating enough cash from our operations to meet and exceed our working capital requirements. We were required to expend certain funds during the first quarter to enhance our infrastructure to be able to effectively manage the growth surge we are presently experiencing in our revenue, which included attracting and retaining new executives, supplementing our existing sales and marketing team with additional sales and marketing personnel, integrating our LaPolla Products acquisition, creating sales, marketing and promotional materials, rolling out our LaPolla Products in national trade shows, and satisfying non-recurring liabilities related to our discontinued RSM Products business.

We had $121,746 of cash on hand at March 31, 2005 as compared to $24,465 at December 31, 2004, which represents an increase of $97,281. During the three months ended March 31, 2005, our working capital deficit decreased $2,975,900 from a deficit of $7,706,197 as of December 31, 2004 to a deficit of $4,730,297 as of March 31, 2005. This decrease in the working capital deficit was primarily attributable to a decrease of $2,505,593 in monies due to the Chairman resulting from debt cancellation, a $1,886,519 increase in accounts payable, a $15,776 increase in accrued expenses and other current liabilities, a $1,946,418 increase in net trade receivables, an increase in inventories of $360,733, a $60,934 decrease in the line of credit, and an increase of 87,333 in prepaid expenses and other current assets.

For the three months ending March 31, 2005, the net cash used for operating and investing activities was $1,042,187 and $1,977,435, respectively, and net cash provided by financing activities was $3,116,903 compared to the net cash used for operating activities of $1,286,428, and net cash used in investing and provided by financing activities of $54,379 and $1,358,876, respectively, for the three months ending in March 31, 2004.

The net cash used for operating activities for the three months ended March 31, 2005 was $1,042,187 compared to cash used of $1,286,428 for the three months ended March 31, 2004. The decrease in net cash used for operating activities of $244,241 was primarily due to a decrease in prepaid expenses and other current assets and an increase in accounts payable and accrued expenses and other current liabilities, and was offset by an increase in trade receivables. The net cash provided by operating activities for discontinued operations was $215,239 and $528,521 for the three months ended March 31, 2005 and 2004, respectively.

The net cash used for investing activities for the three months ended March 31, 2005 was $1,977,435 compared to the net cash provided by investing activities of $54,379 for the three months ended March 31, 2004. This increase in net cash used for investing activities of $1,923,056 was primarily attributable to our investment in the LaPolla Subsidiary for $2,000,000 in cash, a decrease in deposits and other non current assets, and was offset by an increase in acquisition of machinery and equipment. The net cash used in financing activities for discontinued operations was $-0- and $9,927 for the three months ended March 31, 2005 and 2004, respectively.

The net cash provided by financing activities for the three months ended March 31, 2005 was $3,116,903 compared to the cash provided of $1,358,876 for the three months ended March 31, 2004. The increase in net cash provided from financing activities of $1,758,027 was attributable to an increase in funding received by the Chairman for the purchase of the LaPolla Subsidiary, an increase in the payments made on notes and a line of credit, and an increase on payments made on long term debt.

We believe that our net cash received from operating activities will soon outpace our net cash used for operating activities. We will continue to require supplemental funds as necessary from borrowings from our Chairman or other alternative sources of funding to the extent available, such as private placements of debt and/or equity securities, to have sufficient resources to meet our working capital requirements and other cash needs over the next year until we become self sufficient with the cash received from our operating activities. Although no formal commitment has been received from the Chairman, he has continually provided us with the required funds to continue our operations to date. There can be no assurance that the Chairman will continue to provide us funds or that any alternative sources of financing will be available to us at such point in time, or if obtainable, on terms that are commercially feasible.

Going Concern

While our unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. Factors contributing to this substantial doubt include recurring losses from operations and net working capital deficiencies. As mentioned in the Financial Condition, Liquidity and Capital Resources section above, we are currently dependent on funding from the Chairman to continue our operations, although such dependence is decreasing based on our increase in revenues and profit margins. The discontinuance of such funding, and the unavailability of financing to replace such funding, could result in the Company ceasing operations.

Forward Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express our opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of our control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by us about our businesses including, without limitation, the risk factors discussed below. Although we believe our expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause our or our industry's actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause our financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: (a) Financial position and results of operations, including general and administrative expense targets and effects on income from continuing operations; (b) Cash position and cash requirements, including the sufficiency of our cash requirements for the next twelve months; (c) Sales and margins; (d) Sources, amounts, and concentration of revenue; (e) Costs and expenses; (f) Accounting estimates, including treatment of goodwill and intangible assets, doubtful accounts, inventory, restructuring, and warranty, and product returns; (g) Operations, supply chain, quality control, and manufacturing supply, capacity, and facilities; (h) Products and services, price of products, product lines, and product and sales channel mix; (i) Relationship with customers, suppliers and strategic partners; (j) Raw material variations, substrate preparation, application specifications, operator techniques, and ambient weather fluctuations; (k) Acquisition and disposition activity; (l) Credit facility and ability to raise capital; (m) Real estate lease arrangements; (n)Global economic, social, and geopolitical conditions; (o) Industry trends and our response to these trends; (p) Tax position and audits; (q) Cost-reduction efforts, including workforce reductions, and the effect on employees; (r) Sources of competition; (s) Protection of intellectual property; (t) Outcome and effect of current and potential future litigation; (u) Research and development efforts; (v) Future lease obligations and other commitments and liabilities; (w) Common stock, including trading price; (x) Security of computer systems; and (y) Changes in accounting policies and practices, as may be adopted by regulatory agencies, and the Financial Accounting Standards Board. We do not plan to update any such forward-looking statements and expressly disclaim any duty to update the information contained in this report except as required by law.

A-14

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not issue or invest in financial instruments or their derivatives for trading or speculative purposes and are not subject to material foreign currency exchange risks at this time. Our outstanding debt and related interest expense, as it relates to interest rate exposure, in the United States is currently not material to our operations.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Principal Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2005, the end of the quarterly period covered by this report. Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, as amended, our disclosure controls and procedures were not as effective as originally contemplated nor did such controls operate at a level appropriate to provide reasonable assurance for certain matters. A material weakness existed. The material weakness identified originated with the period immediately following the Company’s discontinuance of the operations of its RSM Subsidiary on November 5, 2004. The CFO that was originally responsible for the preparation of the financial statements and related notes for the quarter and year ended December 31, 2004 resigned on February 14, 2005 for title purposes and February 28, 2005 for employment purposes. A new CFO was retained on February 25, 2005. The new CFO reviewed and completed the worksheets relating to the evaluation of our disclosure controls and procedures. The CEO reviewed and approved the completed evaluation report. The Company also made an acquisition on February 11, 2005. All of the changes in this report, as amended, requiring reclassifications, restatements, as well as other changes, pertain to knowledge and experience concerning the application of certain accounting principles. The material weakness as identified highlights the need to train accounting and executive personnel regarding the application of appropriate accounting principles for SEC reporting and for succession. The actions that the Company has taken to correct this material weakness include but are not limited to: (a) training of the CEO concerning the tools that are used to prepare and review financial statements and related disclosures and the application of certain accounting principles; (b) enhancement of the hiring practices of the Company to seek where practicable CFOs that have prior SEC reporting experience as a prerequisite for that position; (c) a training program has been initiated for all accounting personnel at various levels to facilitate accurate and punctual reporting; (d) the hiring of our current CFO with prior SEC reporting experience; and (e) an increase in the number of accounting related personnel as deemed required. The Company believes the material weakness identified above has been corrected. There were changes in our internal controls during the first quarter of 2005 as described above. There were significant changes in our internal controls or in other factors after the end of the first quarter of 2005 as described above. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Various Lawsuits and Claims Arising in the Ordinary Course of Business

We are involved in various lawsuits and claims arising in the ordinary course of business

Item 2. Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

During the quarterly period ended March 31, 2005, we issued restricted common stock for certain private transactions, in reliance on Section 4(2) of the Act, as described below:

(a) On January 4, 2005, we issued 18,181,818 shares of restricted common stock to our Chairman of the Board, in exchange for his cancellation of $6,000,000 of indebtedness represented by short term loans bearing interest at 9% per annum, which were advanced to us and our subsidiaries for working capital and other corporate purposes. The price per share used to determine the number of shares of restricted common stock for this transaction was 110% of the closing price of our common stock as traded on the American Stock Exchange on January 4, 2005 or $ .33 per share.

(b) On February 11, 2005, we issued 34 shares of restricted common stock to Billi Jo Hagan, Trustee of the Billi Jo Hagan Trust, Dated October 6, 2003, in connection with the acquisition of our LaPolla Subsidiary. This transaction was valued and recorded at approximately $22. See Part I - Financial Information, Item 1 - Financial Statements, Notes to Unaudited Condensed Consolidated Financial Statements, Note 7 - Acquisition for more information on this transaction.

(c) On March 31, 2005, we issued 4,000 shares of restricted common stock to our CEO, as other compensation, pursuant to his employment agreement, which was valued and recorded at $2,000.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Index of Exhibits on Page A-17.

A-15

SIGNATURES

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

			LAPOLLA INDUSTRIES, INC.
			(F/K/A IFT CORPORATION)
Date:	March __, 2006	By:
			Michael T. Adams
			CEO
			LAPOLLA INDUSTRIES, INC.
			(F/K/A IFT CORPORATION)
Date:	March __, 2006	By:
			John A. Campbell
			CFO and Treasurer

A-16

INDEX OF EXHIBITS

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1/A	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2/A	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.
32/A	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.

A-17

Exhibit 31.1/A

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael T. Adams, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

Exhibit 31.2/A

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John A. Campbell, certify that:

6. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

7. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

8. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

9. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

10. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

Exhibit 32/A

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350 and in accordance with SEC Release No. 33-8238. These certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended March 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended March 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 4

Proposed Amended Form 10-Q/A for June 30, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2005

Commission File No. 001-31354

LaPolla Industries, Inc.

(formerly known as IFT Corporation)

(Exact name of Registrant as Specified in its Charter)

Delaware		13-3545304
(State of Incorporation)		(I.R.S. Employer Identification No.)
Intercontinental Business Park
15402 Vantage Parkway East, Suite 322
Houston, Texas		77032
(Address of Principal Executive Offices)		(Zip Code)
	(281) 219-4700
	(Registrant’s Telephone Number)

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, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of July 20, 2005 there were 50,572,986 shares of Common Stock, par value $.01, outstanding.

ITEMS AMENDED HEREBY

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The information presented herein reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. located in Arizona that was acquired on February 11, 2005 and merged into IFT Corporation as described above. Please find below a description of the items amended hereby:

(A)  Reclassification of Continuing and Discontinued Operations - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the Securities and Exchange Commission (“SEC”) based on guidance received from the SEC regarding the manner in which the continuing and discontinued operations were originally presented and determined that certain reclassifications were required to make the presentation conform to applicable accounting principles. The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The Infiniti Subsidiary was acquired effective September 1, 2001. The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to our discontinued operations from our continuing operations. The aggregate financial data originally presented was not affected by the reclassification.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Condensed Consolidated Statements of Operations as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which other similarly situated public companies, like us, record certain direct labor expenses, shipping and handling costs, and warehousing costs, and determined that certain reclassifications were required to make the Company’s Condensed Consolidated Statements of Operations comparable to other similarly situated public companies. The Company recorded certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs, and warehousing costs as Selling, General and Administrative. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item.

(C)  Restatement of Inventory and Cost of Sales- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC in paragraph (B) above and Accounting Research Bulletin 43, Chapter 4, regarding the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in (A) and (B) above, restated the value of Inventories on the Condensed Consolidated Balance Sheets and Cost of Sales on the Condensed Consolidated Statements of Operations.

(D)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the allowance for doubtful accounts was calculated and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. As described in paragraph (A) above, the Company discontinued certain operations, one of which was its wholly-owned subsidiary RSM Technologies, Inc. (“RSM Subsidiary”), on November 5, 2004. The RSM Subsidiary’s operations related to the former RSM Products, which products were initially distributed through the Infiniti Subsidiary. The Infiniti Subsidiary also distributed its own Infiniti Products. The Infiniti Subsidiary’s accounting policy with respect to the method and percentages used to determine the valuation allowance for uncollectible receivables was based primarily on the historical data relating to bad debts of the former RSM products. The Company acquired LaPolla Industries, Inc., an Arizona corporation, on February 11, 2005 (the “LaPolla Subsidiary”), which adopted the aforementioned Infiniti Subsidiary’s accounting policy to be consistent at the time. The Company, after the reclassifications in paragraph (A) above, reevaluated the historical data relating to bad debts for the Infiniti Products and determined a change in method and percentages used to calculate the valuation allowance for uncollectible receivables was required for the year 2004. The Company changed the method from the aging method to the percentage-of-sales method and adjusted the percentage used to match the historical data relating to bad debts and credit sales of the Infiniti Products for the year 2004. The Company reevaluated the percentage-of-sales method and percentage used for the 2004 year again for the first and second quarters of 2005 against the historical data relating to bad debts and credit sales of the Infiniti Products and LaPolla Products and determined that the 2004 year criteria was also appropriate for the first and second quarters of 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C), restated the allowance for doubtful accounts on the Condensed Consolidated Balance Sheets and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations.

(E)  Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which goodwill was recorded in connection with the LaPolla Subsidiary acquisition and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. In connection with the acquisition of the LaPolla Subsidiary, the Company acquired a customer list and product formulation which assets were included in the aggregate value of goodwill attributable to the transaction, when they should have been valued separately, disaggregated from goodwill, treated as other intangible assets, and amortized according to their estimated useful lives. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C) and (D), separately valued the customer list and product formulation, disaggregated these values from the goodwill and identified them as other intangible assets on the Condensed Consolidated Balance Sheets, established useful lives, and recorded amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations.

(F)  Restatement of Paid-In Capital and Share-Based Compensation Expense - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which it elected to implement SFAS No. 123R and determined that a restatement was necessary to make the presentation conform to applicable implementation guidelines. The Company implemented SFAS No. 123R during the second quarter of 2005 when it should have implemented it in the third quarter of 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C), (D) and (E), restated the Paid-In Capital on the Condensed Consolidated Balance Sheets and Share-Based Compensation expense originally included in the Selling. General and Administrative line item on the Condensed Consolidated Statement of Operations.

The Company has fully updated all affected portions of this amended report, including the condensed consolidated financial statements and related notes and MD&A, to reflect the reclassifications and restatements described above. In addition, certain scrivener’s errors and captions in the condensed consolidated financial statements and related notes and disclosures have been updated throughout this amended report to make the presentation more useful, informative, transparent, and comparative.

A-2

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

FORM 10-Q/A

FOR THE QUARTER ENDED JUNE 30, 2005

INDEX

		Page
PART I — FINANCIAL INFORMATION
	Item 1.  Financial Statements	A-4
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	A-12
	Item 3.  Quantitative and Qualitative Disclosures About Market Risk	A-14
	Item 4.  Controls and Procedures	A-14
PART II — OTHER INFORMATION
	Item 1.  Legal Proceedings	A-15
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	A-15
	Item 3.  Defaults Upon Senior Securities	A-15
	Item 4.  Submission of Matters to a Vote of Security Holders	A-15
	Item 5.  Other Information	A-15
	Item 6.  Exhibits	A-15
SIGNATURES		A-16
INDEX OF EXHIBITS		A-17

A-3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

INDEX TO FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES

CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30, 2005 (Unaudited) and December 31, 2004	A-5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three and Six Months Ended June 30, 2005 and 2004	A-6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Six Months Ended June 30, 2005 and 2004	A-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		A-8

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.

A-4

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2005			2004
	Restated			Restated
	(Unaudited)
ASSETS
Current Assets:
Cash	$	107,525		$	24,465
Trade Receivables, Net		3,519,144			691,926
Inventories		872,203			267,995
Prepaid Expenses and Other Current Assets		163,617			41,053
Current Portion of Assets of Discontinued Operations		7,151			438
Total Current Assets		4,669,640			1,025,877
Property, Plant and Equipment, Net		573,581			287,784
Other Assets:
Goodwill and Intangible Assets, Net		2,151,014			774,000
Deposits and Other Non-Current Assets		76,029			56,471
Total Other Assets		2,227,043			830,471
Total Assets	$	7,470,264		$	2,144,132
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities:
Accounts Payable	$	3,724,856		$	1,126,847
Accrued Expenses and Other Current Liabilities		544,391			471,008
Lines of Credit		100,057			219,152
Loans Payable - Related Party		4,279,408			5,670,000
Note Payable - Other		500,000			—
Current Portion of Long-Term Debt		48,136			24,582
Current Portion of Liabilities from Discontinued Operations		805,314			1,220,485
Total Current Liabilities		10,002,162			8,732,074
Other Liabilities:
Non Current Portion of Long-Term Debt		145,609			14,243
Non Current Portion of Liabilities from Discontinued Operations		525,000			525,000
Reserve for Litigation		15,000			15,000
Total Other Liabilities		685,609			554,243
Total Liabilities	$	10,687,771		$	9,286,317
Stockholders’ (Deficit):
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of which Designations:
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued and Outstanding (Less Offering Costs of $7,465) at June 30, 2005 and December 31, 2004; $62,500 aggregate liquidation preference at June 30, 2005 and December 31, 2004		55,035			55,035
Common Stock, $.01 Par Value; 60,000,000 Shares Authorized; 50,564,986 and 32,014,369 Issued and Outstanding at June 30, 2005 and December 31, 2004, Respectively		505,650			320,144
Additional Paid-In Capital		59,784,797			53,625,390
Accumulated (Deficit)		(63,562,989	)		(61,142,754	)
Total Stockholders’ (Deficit)		(3,217,507	)		(7,142,185	)
Total Liabilities and Stockholders’ (Deficit)	$	7,470,264		$	2,144,132

See accompanying notes to condensed consolidated financial statements.

A-5

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	Restated			Restated			Restated			Restated
Sales:
Coatings, Sealants and Other Products	$	5,206,176		$	586,629		$	7,663,829		$	1,047,526
Total Sales		5,206,176			586,629			7,663,829			1,047,526
Cost of Sales:
Coatings, Sealants and Other Products		4,183,298			472,958			6,388,291			829,583
Total Cost of Sales		4,183,298			472,958			6,388,291			829,583
Gross Profit		1,022,878			113,671			1,275,538			217,943
Operating Expenses:
Selling, General and Administrative		1,620,713			753,427			2,710,215			1,291,197
Professional Fees		126,723			151,373			393,218			265,521
Depreciation and Amortization		26,153			21,298			48,712			41,668
Consulting Fees		64,011			60,780			125,392			70,993
Interest Expense		10,702			17,067			28,542			45,792
Interest Expense - Related Party		43,694			68,919			82,344			83,405
Other (Income) Expense		(17,242	)		93			(17,242	)		761
Total Operating Expenses		1,874,753			1,072,957			3,371,181			1,799,337
Operating (Loss)		(851,875	)		(959,286	)		(2,095,643	)		(1,581,394	)
Income (Loss) From Discontinued Operations		2,514			(569,251	)		(324,591	)		(1,654,180	)
Net (Loss)	$	(849,361	)	$	(1,528,537	)	$	(2,420,234	)	$	(3,235,574	)
Net (Loss) Per Share-Basic and Diluted:
Continuing Operations	$	(0.016	)	$	(0.033	)	$	(0.041	)	$	(0.054	)
Discontinued Operations		0.000			(0.019	)		(0.006	)		(0.057	)
Total Net (Loss)	$	(0.016	)	$	(0.052	)	$	(0.047	)	$	(0.111	)
Weighted Average Shares Outstanding		50,306,865			28,735,928			50,252,462			28,784,466

____________________

(A)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the three and six months ended June 30, 2005. The reclassification affected Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales which each increased $104,879 and $236,765; Gross Profit decreased $104,879 and $236,765; Selling, General and Administrative decreased $93,433 and $219,520; Depreciation and Amortization decreased $11,446 and $17,245; and Total Operating Expenses decreased $104,879 and $236,765, for the three and six months ended June 30, 2005, respectively.

(B)  Restatement of Inventory and Cost of Sales - The Company, after the reclassification in paragraph (A) above, restated the value of Inventories on the Consolidated Balance Sheets for quarter ended June 30, 2005 and Cost of Sales on the Consolidated Statements of Operations for the for the three and six months ended June 30, 2005. Inventories, Total Current Assets, and Total Assets each increased $64,804 for the quarter ended June 30, 2005; and Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales each decreased $21,395 and $52,390; Gross Profit increased $21,395 and $52,390; and Operating Loss and Net Loss each decreased $21,395 and $52,390, for the three and six months ended June 30, 2005. No income tax effects were related to this restatement. See Note 17, paragraph (C) for illustrative requirement.

(C)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassification in paragraph (A) and restatement in paragraph (B) above, restated the Allowance for Doubtful Accounts for the quarter ended June 30, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three and six months ended June 30, 2005. Allowance for Doubtful Accounts increased $25,498 and Total Current Assets and Total Assets each decreased $25,498, for the quarter ended June 30, 2005; and Selling, General and Administrative, Operating Loss, and Net Loss each increased $3,271 and decreased 20,111, for the three and six months ended June 30, 2005, respectively. No income tax effects were related to this restatement. See Note 17, paragraph (D) for illustrative requirement.

(D)  Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company, after the reclassification in paragraph (A) and restatements in paragraphs (B) and (C) above, separately valued the customer list and product formulation acquired with the LaPolla Subsidiary, disaggregated these values from Goodwill and identified them as Other Intangible Assets for the quarter ended June 30, 2005, and recorded Amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2005. Goodwill and Other Intangible Assets, Net, Total Other Assets, and Total Assets each decreased $5,769 for the quarter ended June 30, 2005; and Depreciation and Amortization, Operating Loss, and Net Loss each increased $5,769 and $7,692, for the three and six months ended June 30, 2005, respectively. No income tax effects were related to this restatement. See Note 17, paragraph (E) for illustrative requirement.

(E)   Restatement of Additional Paid-In Capital and Share-Based Compensation Expense - The Company, after the reclassification in paragraph (A) and restatements in paragraphs (B), (C), and (D) above, restated Additional Paid-In Capital on the Condensed Consolidated Balance Sheets for the quarter ended June 30, 2005 and Share-Based Compensation expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2005. Additional Paid-In Capital and Accumulated Deficit each decreased $25,473 for the quarter ended June 30, 2005; and Selling, General and Administrative, Operating Loss, and Net Loss each decreased $25,473, for the three and six months ended June 30, 2005, respectively. No income tax effects were related to this restatement. See Note 17, paragraph (F) for illustrative requirement.

See accompanying notes to condensed consolidated financial statements.

A-6

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2005			2004
	Restated			Restated
Cash Flows From Operating Activities
Net (Loss)
Continuing Operations	$	(2,095,645	)	$	(1,581,394	)
Discontinued Operations		(324,591	)		(1,654,180	)
Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) by Operating Activities:
Depreciation and Amortization		65,124			41,669
Provision for Losses on Trade Receivables		25,498			—
Loss on Disposition of Property, Plant and Equipment		(2,657	)		760
Stock Based Operating Expenses:
Other Compensation		5,600			8,574
Board of Director Fees		339,290			251,820
Changes in Assets and Liabilities, Net of Effects from Purchase of LaPolla Subsidiary
Trade Receivables		(1,340,505	)		58,174
Inventories		(292,637	)		11,204
Prepaid Expenses and Other Current Assets		(12,364	)		(173,072	)
Deposits and Other Non Current Assets		(136,835	)		12,420
Accounts Payable		1,429,855			(196,985	)
Accrued Expenses and Other Current Liabilities		240,815			121,537
Other Liabilities		184,420			—
Reserve for Litigation		—			15,000
Net Operating Activities of Discontinued Operations		(406,280	)		(700,252	)
Net Cash (Used in) Operating Activities		(2,320,912	)		(3,784,725	)
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment	$	(313,456	)	$	(92,312	)
Payment for Purchase of LaPolla Subsidiary, Net of Cash Acquired		(1,931,825	)		—
Net Investing Activities of Discontinued Operations		—			—
Net Cash Provided by (Used in) Investing Activities		(2,245,281	)		(92,312	)
Cash Flows From Financing Activities
Proceeds from the Issuance of Stock	$	—		$	—
Proceeds from Line of Credit		2,967			7,789
Payments on Line of Credit		(122,063	)		(6,600	)
Proceeds from Loans Payable - Related Party		4,302,500			3,950,000
Proceeds from Note Payable - Other		500,000			—
Principal Repayments on Long Term Debt		(28,323	)		(2,701	)
Principal Payments under Capital Lease Obligation		(1,177	)		(878	)
Net Financing Activities of Discontinued Operations		—			(19,854	)
Net Cash Provided by Financing Activities		4,653,904			3,927,756
Net Increase In Cash	$	87,711		$	50,719
Cash at Beginning of Period		24,465			35,385
Cash at End of Period	$	112,176		$	86,104
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Income Taxes	$	—		$	—
Cash Payments for Interest	$	30,015		$	32,641
Supplemental Schedule of Non Cash Investing and Financing Activities
Property, Plant and Equipment acquired via a Capital Lease Obligation	$	—		$	7,200
Property, Plant and Equipment acquired via issuance of Long Term Debt		184,420			—
Common Stock issued as Other Compensation pursuant to Employment Agreements		5,600			8,574
Common Stock issued as Director Fees pursuant to Director Compensation Plan		339,290			251,820
Common Stock issued in connection with Acquisition of Business Entity		22			—
Common Stock extinguished pursuant to Settlement Agreement		—			(131,508	)
Common Stock issued related to and upon Conversion of Preferred Stock		—			674,315
Common Stock issued upon Cancellation of Indebtedness	$	6,000,000		$	—

See accompanying notes to condensed consolidated financial statements.

A-7

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Basis of Presentation.

Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The unaudited condensed consolidated financial statements and related notes reflect the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation subsequent to the current period. To be clear, references to the former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this presentation to aid the reader in understanding the current period presentation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual periods and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2004, including any amendments thereto, as filed with the Securities and Exchange Commission. The Company prepared the condensed consolidated financial statements following the requirements of the rules promulgated by the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The results of operations for the six months ended June 30, 2005 are not necessarily indicative of the results to be expected for the year ending December 31, 2005 or any other period(s).

Note 2. Reclassifications and Changes in Presentation.

Certain amounts in the prior years have been reclassified to conform to the 2005 unaudited condensed consolidated financial statement presentation. The Company has separately disclosed the operating, investing and financing portion of the cash flows attributable to its discontinued operations.

Note 3. Going Concern.

While the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations, certain adverse conditions and events cast substantial doubt upon the validity of this assumption. The Company has experienced significant recurring operational losses and negative cash flows from operations, and at June 30, 2005 has an accumulated deficit, net of dividends, of $63,562,989, a working capital deficit of $5,332,522 and its total liabilities exceeded its total assets by $3,217,508. These factors raise doubt about the Company’s ability to continue as a going concern. The Company has relied principally on non-operational sources of financing, mainly from Richard J. Kurtz, Chairman of the Board (“Chairman”), to fund its operations for approximately seven years. Although the Company had no formal commitment from the Chairman to fund the Company’s operating requirements for the 2005 year, the Company received short term demand loans, during the period January 1, 2005 through June 30, 2005, aggregating $4,302,500 from the Chairman, of which $2,000,000 was for the acquisition of the LaPolla Subsidiary on February 11, 2005, and the remaining $2,302,500 for operational costs and other corporate purposes. The Company’s ability to continue as a going concern will be dependent on management’s ability to successfully execute its business plan, which includes increasing revenues while decreasing operating costs and expenses, as well as, increasing operational cash flow, continued support from the Chairman, and obtaining additional funding to support longer term capital requirements. If management in unsuccessful is obtaining one or more of the above mentioned goals, the Company’s ability to continue as a going concern would be adversely impacted. These financial statements do not include adjustments or disclosures that may result from the Company’s inability to continue as a going concern. See also Note 10 - Note Payable - Other.

Note 4. Trade Receivables.

Trade receivables are comprised of the following:

	June 30, 2005			December 31, 2004
Trade Receivables	$	3,557,463		$	704,747
Less: Allowance for Doubtful Accounts		(38,319	)		(12,821	)
Trade Receivables, Net	$	3,519,144		$	691,926

Note 5. Inventories.

Inventories are comprised of the following:

	June 30, 2005		December 31, 2004
Raw Materials	$	479,711	$	65,920
Finished Goods		392,491		202,074
Total	$	872,203	$	267,995

Note 6. Property, Plant and Equipment.

Property, Plant and Equipment are comprised of the following:

	June 30, 2005			December 31, 2004
Vehicles	$	246,290		$	137,822
Leasehold Improvements		9,926			62,278
Office Furniture and Equipment		93,714			70,195
Computers and Software		207,335			192,284
Displays		62,278			—
Machinery and Equipment		319,954			133,273
Total Property, Plant and Equipment	$	939,497		$	595,852
Less: Accumulated Depreciation		(365,916	)		(308,068	)
Total Property, Plant and Equipment, Net	$	573,581		$	287,784

A-8

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 7. Goodwill and Other Intangible Assets.

Goodwill

	June 30, 2005			December 31, 2004
Infiniti Subsidiary	$	—		$	774,000
LaPolla Subsidiary		1,951,000	*		—
	$	1,951,000		$	774,000

* See Also Note 13 - Merger of Subsidiary.

Other Intangible Assets

	June 30, 2005
	Gross		Accumulated			Amortization
	Amount		Amortization			Period
Customer List	$	69,235	$	(4,616	)		5 Years
Product Formulation		138,471		(3,076	)		15 Years
	$	207,706	$	(7,692	)

The Customer List and Product Formulation were acquired in connection with the acquisition of the LaPolla Subsidiary.

Note 8. Line of Credit.

Line of credit is comprised of the following:

	June 30, 2005		December 31, 2004
$180,000 Line of Credit, maturing February 1, 2006, bears interest at prime plus 1% per annum, secured by all the assets of the LaPolla Subsidiary and a personal guarantee from the Chairman of the Board.	$	100,057	$	219,152

Note 9. Loans Payable - Related Party.

Loans payable - related party is comprised of funds loaned to the Company, for working capital and other corporate purposes, from the Chairman. These loans are payable upon demand, unsecured and bear interest at 9% per annum through December 31, 2004, and at 6% per annum for the six months ended June 30, 2005. During the period from January 1, 2005 to June 30, 2005 the Chairman loaned the Company funds aggregating $4,302,500, $2,000,000 of which was used for the purchase of the LaPolla Subsidiary.

Note 10. Note Payable - Other.

On June 2, 2005, the Company and the Chairman signed a Promissory Note with a national institution granting access to funds in the amount of $2,000,000, which may be drawn against from time to time for the operations of the Company. During the second quarter, the Company accessed $500,000, which represents the balance as of June 30, 2005. The Note bears interest at a rate equal to 1-month LIBOR plus two and one-quarter percent (2.25) per annum (“LIBOR-Based Rate”), and has a maturity date of June 1, 2006.

Note 11. (Loss) Per Share - Basic and Diluted.

The table below presents the computation of basic and diluted (loss) per share:

	Three Months Ended June 30,												Six Months Ended June 30,
	2005						2004						2005						2004
				Per Share						Per Share						Per Share						Per Share
	Amount			Amount			Amount			Amount			Amount			Amount			Amount			Amount
Operating (Loss)	$	(851,875	)	$	(0.016	)	$	(959,286	)	$	(0.033	)	$	(2,095,643	)	$	(0.041	)	$	(1,581,394	)	$	(0.054	)
Income (Loss) from Discontinued Operations		2,514			0.000			(569,251	)		(0.019	)		(324,591	)		(0.006	)		(1,654,180	)		(0.057	)
Net (Loss)	$	(849,361	)	$	(0.016	)	$	(1,528,537	)	$	(0.052	)	$	(2,420,234	)	$	(0.047	)	$	(3,235,574	)	$	(0.111	)
Weighted Average Common Shares Outstanding		50,306,865						28,735,928						50,252,462						28,784,466

Basic and diluted net loss per share are the same since (a) the Company has reflected net losses from continuing operations for all periods presented and (b) the potential issuance of shares of the Company would be anti-dilutive.

A-9

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 12. Discontinued Operations.

On November 5, 2004, the Company discontinued the operations of its RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). The condensed consolidated financial statements and the related notes have been recast to reflect the financial position, results of operations and cash flows on an aggregated basis for the RSM Subsidiary.

The assets and liabilities of the discontinued operations presented on an aggregated basis in the Condensed Consolidated Balance Sheets consist of the following at:

Assets	June 30, 2005		December 31, 2004
Cash	$	4,651	$	438
Prepaid Expenses and Other Current Assets		2,500		—
Total Assets	$	7,151	$	438
Liabilities
Accounts Payable	$	255,396	$	662,696
Accrued Expenses and Other Current Liabilities		50,000		57,871
Line of Credit		499,918		499,918
Reserve for Litigation		525,000		525,000
Total Liabilities	$	1,330,314	$	1,745,485

Note 13. Merger of Subsidiary.

Effective April 1, 2005, Infiniti Products, Inc., a Florida corporation (“Infiniti Subsidiary”), merged with and into LaPolla Industries, Inc., an Arizona corporation (“LaPolla Subsidiary”), whereupon the separate existence of the Infiniti Subsidiary ceased and the LaPolla Subsidiary continued as the surviving corporation.

Note 14. Business Segment Information.

Effective April 1, 2005, the Company determined that it had two distinct business segments. These two business segments were defined as Corporate and LaPolla Products. On April 1, 2005, the Company’s Infiniti Subsidiary merged with and into the LaPolla Subsidiary and, therefore, the Infiniti Products business segment has been combined with and into the LaPolla Products segment.

The business segment financial data reflected in the table below was derived from the Company’s condensed consolidated financial position and condensed consolidated results of operations as follows:

(i) Corporate was derived from the financial data of the Company; and

(ii) LaPolla Products was derived from the financial data of the LaPolla Subsidiary.

The following table reflects certain business segment financial data as of and for the six months ended June 30, 2005:

	Corporate			LaPolla Products			Total
Revenue	$	---		$	7,663,829		$	7,663,829
Gross Profit	$	---		$	1,275,538		$	1,275,538
Operating (Loss)	$	(1,529,419	)	$	(566,224	)	$	(2,095,643	)
Capital Expenditures (Net of Capital Leases)	$	12,021		$	256,242		$	268,263
Depreciation and Amortization Expense	$	25,957		$	22,755		$	48,712
Identifiable Assets	$	3,003,089		$	4,467,175		$	7,470,264

On November 5, 2004, the Company discontinued the operations of its RSM Subsidiary and the related business segment, formerly reflected as RSM Products, was eliminated at that time. The table above does not include any financial data relating to the discontinued RSM Products business segment, which is reported as discontinued operations in the Company’s financial statements. See alsoNote 12 - Discontinued Operations.

Note 15. Commitments and Contingencies.

Reserve

	June 30, 2005		December 31, 2004
Accounts Payable - Discontinued Operations	$	255,396	$	662,696
Accrued Expenses and Other Current Liabilities - Discontinued Operations		50,000		57,871
Line of Credit - Discontinued Operations		499,918		499,918
Reserve for Litigation - Discontinued Operations		525,000		525,000
Reserve for Litigation - Current Operations		15,000		15,000
Total	$	1,345,314	$	1,760,485

Note 16. Subsequent Events.

Note Payable - Other

The Company accessed $250,000 from the Note in order to ensure various key vendors were paid within certain time frames. See Note 10 - Note Payable - Other.

A-10

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 17. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements.

(A)  Reclassification of Continuing and Discontinued Operations - The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to the Company’s discontinued operations from its continuing operations. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (A) for more information.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the three and six months ended June 30, 2005. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (B) for more information.

(C)  Restatement of Inventory and Cost of Sales - The Company, after the reclassifications in paragraphs (A) and (B) above, restated the value of Inventories on the Consolidated Balance Sheets for the quarter ended June 30, 2005 and Cost of Sales on the Consolidated Statements of Operations for the for the three and six months ended June 30, 2005. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net Loss (As Previously Reported)	$	(887,189	)	$	(2,510,516	)
Adjustments		21,395			52,390
As Adjusted and Restated	$	(865,794	)	$	(2,458,126	)

See also Page A-2 - Items Amended Hereby, paragraph (C) for more information.

(D) Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the Allowance for Doubtful Accounts for the quarter ended June 30, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three and six months ended June 30, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net Loss (As Restated Per (C))	$	(865,794	)	$	(2,458,126	)
Adjustments		(3,217	)		20,111
As Adjusted and Restated	$	(869,065	)	$	(2,438,015	)

See also Page A-2 - Items Amended Hereby, Item (D) for more information.

(E) Restatement of Goodwill and Other Intangible Assets and Amortization Expense - The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C) and (D) above, separately valued the customer list and product formulation acquired with the LaPolla Subsidiary, disaggregated these values from Goodwill and identified them as Other Intangible Assets for the quarter ended June 30, 2005, and recorded Amortization expense in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net Loss (As Restated Per (D))	$	(869,065	)	$	(2,438,015	)
Adjustments		(5,769	)		(7,692	)
As Adjusted and Restated	$	(874,834	)	$	(2,445,707	)

See also Page A-2 - Items Amended Hereby, paragraph (E) for more information.

(F) Restatement of Additional Paid-In Capital and Share-Based Compensation Expense - The Company, after the reclassifications in paragraphs (A) and (B) and restatements in paragraphs (C), (D), and (E) above, restated Additional Paid-In Capital on the Condensed Consolidated Balance Sheets for the quarter ended June 30, 2005 and Share-Based Compensation expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended June 30, 2005			Six Months Ended June 30, 2005
Net Loss (As Restated Per (E))	$	(874,834	)	$	(2,445,707	)
Adjustments		25,473			25,473
As Adjusted and Restated	$	(849,361	)	$	(2,420,234	)

See also Page A-2 - Items Amended Hereby, paragraph (F) for more information.

A-11

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

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

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTERS ENDED JUNE 30, 2005 AND 2004

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, and its subsidiaries, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc. ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The financial review reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation immediately after the end of the third quarter of 2005. To be clear, references to this former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this review to aid the reader in understanding the current period review. The financial review below presents our operating results for the three and six months ended June 30, 2005 and 2004, and our financial condition at June 30, 2005. Except for the historical information contained herein, the following discussion contains forward-looking statements, which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this amended report and specifically under the caption “Forward Looking Statements” below. In addition, the following review should be read in conjunction with the information presented in our unaudited condensed consolidated financial statements and related notes for the three and six months ended June 30, 2005 above.

Overview

We are a publicly traded holding company focused on acquiring and developing companies that operate in the coatings, paints, foams, sealants, and adhesives markets. Effective April 1, 2005, our wholly-owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”), a Florida corporation, which marketed, sold, manufactured and distributed acrylic roof coatings, roof paints, sealers, and roofing adhesives to the home improvement retail and polyurethane foam systems to the industrial/commercial construction industries (“Infiniti Products”), merged with and into our wholly-owned subsidiary, the LaPolla Subsidiary, an Arizona corporation, whereupon the separate existence of the Infiniti Subsidiary ceased and the LaPolla Subsidiary continued as the surviving corporation. The Company acquired 100% of the capital stock of the LaPolla Subsidiary for $2 Million in cash and stock on February 11, 2005. The LaPolla Subsidiary markets, sells, manufactures and distributes acrylic roof coatings, sealers, and polyurethane foam systems to the commercial construction and roof paints and roofing adhesives to the home improvement retail industries (“LaPolla Products”). The LaPolla name has been recognized in the Southwestern United States for over 27 years by roofing contractors, building owners and design professionals. We are continuing to expand our reach with a nationwide sales and marketing program to ensure development and execution of a consistent marketing strategy for our LaPolla Products in all geographic regions that share similar distribution channels and customers. Our sales offices are located in The Woodlands, Texas, Atlanta, Georgia, Camarillo, California, and Mount Holly Springs, Pennsylvania. LaPolla operates two manufacturing plants located in Tempe, Arizona and Deerfield Beach, Florida. A third manufacturing plant is scheduled to open during the third quarter of 2005. The basic assets of the LaPolla Subsidiary include manufacturing equipment, product formulations, raw material and finished goods inventory, long term employees, customers, and vendors, office equipment, accounts receivable, and goodwill. On November 5, 2004, pursuant to resolution of the Board of Directors, we discontinued the operations of our RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). Our condensed consolidated financial statements and related notes have been recast to reflect the financial position, results of operations and cash flows of the RSM Subsidiary as a discontinued operation.

Results of Operations

We operated our business on the basis of two reportable segments, which we refer to as Corporate and LaPolla Products, during the second quarter of 2005. LaPolla Products are collectively referred to as “Coatings, Sealants and Other Products” in our condensed consolidated financial statements for this reporting period. The following table compares 2005 and 2004 revenue for the three and six month periods ended June 30, 2005 and 2004:

	Three Months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
Revenue:
Coatings, Sealants and Other Products	$	5,206,176	$	586,629	$	7,663,829	$	1,047,526
Total Revenue	$	5,206,176	$	586,629	$	7,663,829	$	1,047,526

The $4,619,547 or 787% increase in revenue for the three months ended June 30, 2005 compared to the same 2004 period was primarily the result of an increase in our sales volumes due to strong demand for our LaPolla Products in our target markets. The increase in revenue of $6,616,303, which represents an increase of 632% in revenue for the six months ended June 30, 2005 as compared to the six months ended June 30, 2004 was due primarily to sales recognized from and after our acquisition of the LaPolla Subsidiary, the Infiniti Subsidiary’s sales prior to merging with the LaPolla Subsidiary, and an increase in our sales volumes due to strong demand for our LaPolla Products.

Our cost of sales for the three months ended June 30, 2005 was $4,183,298 as compared to $472,958 for the three months ended June 30, 2004. The increase in the total cost of sales of $3,710,340 was primarily due to increased purchases of the raw materials required to manufacture our LaPolla Products to support our substantial growth in revenue. The cost of sales as a percentage of our revenue was 80.3%for the three months ended June 30, 2005 as compared to 80.6% for the same 2004 period. This .03% decrease in cost of sales as a percentage of revenue from the comparable 2004 period is attributable to the product margin mix resulting from integration of the LaPolla Products and Infiniti Products. The $5,558,708 increase in cost of sales for the six months ended June 30, 2005 compared to the same 2004 period was primarily attributable to costs of raw materials and other costs of sales for the LaPolla Products from and after the acquisition of the LaPolla Subsidiary, costs of raw materials and other costs of sales related to the Infiniti Subsidiary’s products prior to merging with the LaPolla Subsidiary, and increased purchases of raw materials required to manufacture our LaPolla Products to support our substantial growth in revenue during the second quarter of 2005. The cost of sales as a percentage of our revenue was 83.3%for the six months ended June 30, 2005 as compared to 79.1% for the same 2004 period. This 4.2% increase in cost of sales as a percentage of revenue from 2004 is attributable to the product margin mix resulting from integration of the LaPolla Products and Infiniti Products, in addition to competition in the marketplace. The 83.3% cost of sales percentage for the six months ended June 30, 2005 is a combination of the 80.3% cost of sales percentage for the three months ended June 30, 2005 and the 89.7% cost of sales percentage for the three months ended March 31, 2005. The high cost of sales percentage has decreased significantly from the 89.7% cost of sales reported in the first quarter of 2005, which was mainly attributable to former unprofitable customers concerning which we either continue to increase sales prices or eliminate relationships.

A-12

Gross profit as a percentage for the second quarter of 2005 was 19.6% of revenue, which represents a .3 percentage point decrease from the 19.3% rate for the second quarter of 2004. Our gross profit percentage decreased in the second quarter of 2005 compared to the second quarter of 2004 primarily as a result of an increase in sales of lower margin products as compared to higher margin products. The gross profit percentage decreased in the first six months of 2005 compared to the six months ended June 30, 2004, primarily due to the same reasons discussed above in the analysis of the second quarter 2005 decrease in the gross profit percentage. Gross profit for the second quarter of 2005 was $1,022,878, or 19.6% as a percentage of revenue, as compared to gross profit for the first quarter of 2005 which was $252,660, or 10.2% as a percentage of revenue. This 9.4% increase in gross profit was mainly attributable to an increase in selling prices to our customers and elimination of unprofitable customer relationships.

Selling, general and administrative, or SG&A, expenses were $1,620,713, or 31.1% of revenue, in the second quarter of 2005 compared to $753,427, or greater than 100% of revenue, in the second quarter of 2004. SG&A expenses for the first six months of 2005 were $2,710,215, or 35.3% of revenue, compared to $1,291,197, or greater than 100% of revenue, in the comparable 2004 period. The increase in SG&A expense dollars was a result of higher selling and marketing expenses supporting our increase in revenue, the addition of new sales personnel in California and Pennsylvania, an increase in promotion and advertising expenditures, investor relations and American Stock Exchange fees, sales travel expenses to obtain new and maintain existing customers, opening a new sales office in Camarillo, California and Mount Holly Springs, Pennsylvania, various insurance coverage increases due to the increase in revenues, opening two warehouses in Georgia and New Mexico, and non-cash stock compensation to officers and directors.

Professional fees consist of accounting, auditing, and legal fees. Our professional fees for the three months ended June 30, 2005 were $126,723 as compared to $151,373 for the three months ended June 30, 2004. The decrease of $24,650 was primarily due to a decrease in attorney’s fees for past and current litigation, which was offset by an increase in auditing fees incurred during the beginning of the second quarter of 2005 related to the acquisition of the LaPolla Subsidiary. The $127,697 increase in professional fees in the first six months of 2005 compared to the same 2004 period was primarily the result of an increase in attorney’s fees related to past and current litigation, as well as auditing and accounting fees related to our acquisition of the LaPolla Subsidiary.

Our depreciation and amortization expense was $21,563 for the second quarter of 2005 compared to $21,298 for the second quarter of 2004. The increase of $265 was primarily the result of purchasing machinery and equipment for our manufacturing plants in Florida and Arizona. The $7,044 increase in depreciation and amortization expense in the first six months of 2005 compared to the same 2004 period was primarily due to the acquisition of additional assets and machinery and equipment from our acquisition of the LaPolla Subsidiary and purchasing machinery and equipment for our manufacturing plants in Florida and Arizona.

We did not incur any research and development costs in the three or six months ended June 30, 2005 or 2004.

Consulting fees for the three months ended June 30, 2005 were $64,011 as compared to $60,780 for the three months ended June 30, 2004. For the six months ended June 30, 2005, consulting fees were $125,392 compared to $70,993 for the six months ended June 30, 2004. The increases in 2005 were the result of an increase in the number and type of consultants engaged to provide business and financial consulting services for us.

For the three months ended June 30, 2005, our interest expense was $54,396 as compared to $85,986 for the three months ended June 30, 2004. Our interest expense for the six months ended June 30, 2005 was $110,886 as compared to $129,197 for the six months ended June 30, 2004. The decreases were primarily attributable to a decrease in the interest rate on loans payable - related party from 9% per annum to 6% per annum. In addition, the balance on the loans payable - related party was $4,279,408 as of June 30, 2005, as compared to a balance of $5,670,000 as of June 30, 2004.

Other income in the three and six months ended June 30, 2005 was $17,242 compared to $93 and $761, respectively, for the comparable 2004 periods. The increase was primarily the result of a write-off of estimated taxes for the LaPolla Subsidiary due to prior net operating losses in 2004 and gain on the sale of machinery and equipment during the second quarter of 2005.

The loss from discontinued operations for the three months ended June 30, 2005 reflects a $2,514 gain compared to a loss of $569,251 for the three months ended June 30, 2004. The $2,514 gain is due to a decrease in commitments and contingencies during the second quarter of 2005. Our loss from discontinued operations for the six months ended June 30, 2005 reflects a $324,591 loss compared to $1,654,180 for the six months ended June 30, 2004. The $324,591 loss is the result of a $327,105 increase in commitments and contingencies, partially offset the by the $2,514 gain during the three months ended June 30, 2005.

Financial Condition, Liquidity and Capital Resources

We assess our liquidity by our ability to generate cash to fund our operations. Significant factors in the management of liquidity are:  funds generated by operations, levels of accounts receivable, inventories, accounts payable and capital expenditures, funds required for acquisitions, adequate credit facilities, and financial flexibility to attract long-term capital on satisfactory terms. Historically, we have generated insufficient cash from operations to meet our working capital requirements and have relied principally on related party funding from our Chairman over the past six years and outside investors to meet our working capital and other corporate needs. With the discontinuation of our RSM Products business segment, the acquisition of LaPolla, merger of Infiniti and LaPolla, in conjunction with our retention of proven sales and marketing personnel, we are beginning to see substantial improvement in our ability to generate enough cash from our operations to meet our working capital requirements. We were required to expend certain funds during the first and second quarters to enhance our infrastructure to be able to effectively manage the growth surge we are continuing to experience in our revenue, which included attracting and retaining new executives, integrating our LaPolla acquisition, creating sales, marketing and promotional materials, rolling out our LaPolla Products in national trade shows, implementing new software to centralize accounting processes, satisfying non-recurring liabilities related to our discontinued RSM Products business, adding more sales personnel to open up new markets for our LaPolla Products in strategic locations, and opening up new geographically dispersed warehouses to support our national sales strategies and growth plans.

We had $112,176 of cash on hand at June 30, 2005 as compared to $24,465 at December 31, 2004, an increase of $87,711. During the six months ended June 30, 2005, our working capital deficit decreased $2,373,675 from a deficit of $7,706,197 as of December 31, 2004 to a deficit of $5,332,522 as of June 30, 2005. This decrease in the working capital deficit resulted from a decrease of $1,390,592 in loans payable-related party and a decrease in interest of $223,300 due to the Chairman from debt cancellation, a $2,598,009 increase in accounts payable, a $73,383 increase in accrued expenses and other current liabilities and an increase of $154,920 in long-term debt, after taking into account a $2,827,218 increase in net trade receivables, an increase in inventory of $604,208, a $119,095 decrease in a line of credit, an increase of $122,564 in prepaid expenses and other current assets, and a decrease in commitments and contingencies.

For the six months ended June 30, 2005 and 2004, the net cash used for operating activities was $2,320,912 and $3,784,725, respectively. The net cash flow used for investing activities was $2,245,281 for the six months ended June 30, 2005, as compared to the six months ended June 30, 2004, where the net cash flow used was $92,312. The net cash provided by financing activities was $4,653,904 for the six months ended June 30, 2005 compared to $3,927,756 for the same 2004 period.

The net cash used for operating activities for the six months ended June 30, 2005 was $2,320,912 compared to cash used of $3,784,725 for the six months ended June 30, 2004. The decrease in net cash used for operating activities of $1,463,813 was primarily due to an increase in trade receivables, inventories, deposits and other non current assets, accounts payable, accrued expenses and other current liabilities, and other liabilities and a decrease in prepaid expenses and other current assets. The net cash used in operating activities for discontinued operations was $406,280 and $700,252 for the six months ended June 30, 2005 and 2004, respectively.

The net cash used for investing activities for the six months ended June 30, 2005 was $2,245,281 compared to $92,312 for the six months ended June 30, 2004. This increase in net cash used for investing activities of $2,152,969 was primarily attributable to our investment in the LaPolla Subsidiary for $2,000,000 in cash and an increase in acquisitions of machinery and equipment.

A-13

The net cash provided by financing activities for the six months ended June 30, 2005 was $4,653,904 compared to the net cash provided of $3,927,756 for the six months ended June 30, 2004. The increase in net cash provided from financing activities of $726,148 was attributable to an increase in monies received from the Chairman for the purchase of the LaPolla Subsidiary, an increase in proceeds received from a new note payable, partially offset by an increase in payments made on our long term debt and a line of credit. The net cash used in financing activities for discontinued operations was $-0- and $19,854 for the six months ended June 30, 2005 and 2004, respectively.

We believe that the net cash provided by operating activities, supplemented as necessary with borrowings available under our existing credit facilities, will provide us with sufficient resources to meet our working capital requirements during the remainder of this year. Based on our revenue growth trend, we will probably require additional funds to maintain and further improve our financial relationships with our main vendors, the result of which will likely lead to lower raw material costs and higher gross profit margins on select LaPolla Products. The Chairman has loaned us $4,302,500 and is a co-borrower or has personally guaranteed $1,289,754 for added security on lines of credit, long-term debt, and a note payable, which we are responsible to repay or otherwise settle. Based on the foregoing, the Company is anticipating raising monies during the latter part of the 2005 year, based on market conditions, through private placements of debt or equity, to obtain sufficient resources to meet our longer term working capital requirements, debt service and other cash needs over the next year or until we repay or settle the financial matters between us and the Chairman and become self sufficient with the cash received from our operating activities. There can be no assurance that the Company will be able to obtain any funds, or if obtainable, on terms that are commercially feasible. See also Part I - Financial Information, Item 1. Financial Statements, Notes to Condensed Consolidated Financial Statements, Note 3. Going Concern.

Forward Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express our opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of our control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by us about our businesses including, without limitation, the risk factors discussed below. Although we believe our expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause our or our industry's actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause our financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: (a) Financial position and results of operations, including general and administrative expense targets and effects on income from continuing operations; (b) Cash position and cash requirements, including the sufficiency of our cash requirements for the next twelve months; (c) Sales and margins; (d) Sources, amounts, and concentration of revenue; (e) Costs and expenses; (f) Accounting estimates, including treatment of goodwill and intangible assets, doubtful accounts, inventory, restructuring, and warranty, and product returns; (g) Operations, supply chain, quality control, and manufacturing supply, capacity, and facilities; (h) Products and services, price of products, product lines, and product and sales channel mix; (i) Relationship with customers, suppliers and strategic partners; (j) Raw material variations, substrate preparation, application specifications, operator techniques, and ambient weather fluctuations; (k) Acquisition and disposition activity; (l) Credit facility and ability to raise capital; (m) Real estate lease arrangements; (n) Global economic, social, and geopolitical conditions; (o) Industry trends and our response to these trends; (p) Tax position and audits; (q) Cost-reduction efforts, including workforce reductions, and the effect on employees; (r) Sources of competition; (s) Protection of intellectual property; (t) Outcome and effect of current and potential future litigation; (u) Research and development efforts; (v) Future lease obligations and other commitments and liabilities; (w) Common stock, including trading price; (x) Security of computer systems; and (y) Changes in accounting policies and practices, as may be adopted by regulatory agencies, and the Financial Accounting Standards Board. We do not plan to update any such forward-looking statements and expressly disclaim any duty to update the information contained in this report except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not issue or invest in financial instruments or their derivatives for trading or speculative purposes and are not subject to material foreign currency exchange risks at this time. Our outstanding debt and related interest expense, as it relates to interest rate exposure, in the United States is currently not material to our operations.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Principal Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within IFT have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2005, the end of the quarterly period covered by this report. Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, as amended, our disclosure controls and procedures were not as effective as originally contemplated nor did such controls operate at a level appropriate to provide reasonable assurance for certain matters. A material weakness existed. The material weakness identified originated with the period immediately following the Company’s discontinuance of the operations of its RSM Subsidiary on November 5, 2004. The CFO that was originally responsible for the preparation of the financial statements and related notes for the quarter and year ended December 31, 2004 resigned on February 14, 2005 for title purposes and February 28, 2005 for employment purposes. A new CFO was retained on February 25, 2005. The new CFO reviewed and completed the worksheets relating to the evaluation of our disclosure controls and procedures. The CEO reviewed and approved the completed evaluation report. The Company also made an acquisition on February 11, 2005. All of the changes in this report, as amended, requiring reclassifications, restatements, as well as other changes, pertain to knowledge and experience concerning the application of certain accounting principles. The material weakness as identified highlights the need to train accounting and executive personnel regarding the application of appropriate accounting principles for SEC reporting and for succession. The actions that the Company has taken to correct this material weakness include but are not limited to: (a) training of the CEO concerning the tools that are used to prepare and review financial statements and related disclosures and the application of certain accounting principles; (b) enhancement of the hiring practices of the Company to seek where practicable CFOs that have prior SEC reporting experience as a prerequisite for that position; (c) a training program has been initiated for all accounting personnel at various levels to facilitate accurate and punctual reporting; (d) the hiring of our current CFO with prior SEC reporting experience; and (e) an increase in the number of accounting related personnel as deemed required. The Company believes the material weakness identified above has been corrected. There were no changes in our internal controls during the second quarter of 2005. There were significant changes in our internal controls or in other factors after the end of the second quarter of 2005 as described above. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.

A-14

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The following supplements and amends our discussion set forth under Part I, Item 3, “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2004 and Part II, Item 1 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005.

(a) Plymouth Industries, Inc. vs. Urecoats Industries Inc,. Urecoats Manufacturing, Inc., et. al., Defendants

The litigation between Plymouth Industries, Inc., Plaintiff, and Urecoats Industries Inc. and its wholly-owned subsidiaries Urecoats Manufacturing, Inc. and Urecoats Technologies, Inc. and Richard J. Kurtz, Defendants, has been settled pursuant to a Court approved Confidential Settlement Agreement, wherein none of the parties admitted liability or made any admissions with respect to the allegations or claims made in the litigation.

(b) Various Lawsuits and Claims Arising in the Ordinary Course of Business

We are involved in various lawsuits and claims arising in the ordinary course of business, which are, in our opinion, immaterial both individually and in the aggregate with respect to our consolidated financial position, liquidity or results of operations.

Item 2. Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

During the quarterly period ended June 30, 2005, we issued restricted common stock for certain private transactions, in reliance on Section 4(2) of the Act, as described below:

(a)   On May 28, 2005, the third increment of 292,000 shares of restricted common stock granted and issued to our Chairman pursuant to a one time grant of 1,168,000 shares under the Director Compensation Plan (“Director Plan”), vested. We did not consider these shares issued and outstanding due to a vesting provision and non-delivery of the shares pending vesting and as such no value was ascribed to these shares when originally issued on May 28, 2002. The value ascribed to these vested shares was recorded at $277,400. There are 292,000 shares remaining issued but in our custody until such time that they are earned and vested (“Fourth Increment”).

(b)   On June 29, 2005, an aggregate of 68,767 shares of restricted common stock automatically granted and issued to non-employee directors pursuant to the Director Plan upon election at the annual meeting of stockholders held on June 22, 2004 or upon appointment thereafter, vested. We did not consider these shares issued and outstanding due to a vesting provision and non-delivery of the shares pending vesting and as such no value was ascribed to these shares when originally issued. The value ascribed to these vested shares was recorded at $61,890.

(c)   On June 30, 2005, we issued 4,000 shares of restricted common stock to our CEO, as other compensation, pursuant to his employment agreement, which was valued and recorded at $3,600.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

We held our Annual Meeting of Stockholders on June 29, 2005. At the Annual Meeting, our stockholders elected four directors as more fully described below. At our Annual Meeting, there were present in person or by proxy 46,063,931 votes, representing approximately 92% of the total outstanding eligible votes. The result of the proposal considered at the Annual Meeting was as follows:

Proposal One - Election of Directors

	Affirmative Votes		Withheld
1.  Richard J. Kurtz		44,689,664		374,267
2.  Lt. General Arthur J. Gregg, US Army (Retired)		44,689,413		374,518
3.  Michael T. Adams		44,689,328		374,603
4.  Gilbert M. Cohen		45,162,063		901,868

Item 5. Other Information.

None.

Item 6. Exhibits.

See Index of Exhibits on Page A-17.

A-15

SIGNATURES

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

			LAPOLLA INDUSTRIES, INC.
			(F/K/A IFT CORPORATION)
Date:	March __, 2006	By:
			Michael T. Adams
			CEO
			LAPOLLA INDUSTRIES, INC.
			(F/K/A IFT CORPORATION)
Date:	March __, 2006	By:
			John A. Campbell
			CFO and Treasurer

A-16

INDEX OF EXHIBITS

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1/A	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2/A	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.
32/A	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.

A-17

Exhibit 31.1/A

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael T. Adams, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

Exhibit 31.2/A

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John A. Campbell, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

Exhibit 32/A

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350 and in accordance with SEC Release No. 33-8238. These certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended June 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended June 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 5

Proposed Amended Form 10-Q/A for September 30, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2005

Commission File No. 001-31354

LaPolla Industries, Inc.

(formerly known as IFT Corporation)

(Exact name of Registrant as Specified in its Charter)

Delaware		13-3545304
(State of Incorporation)		(I.R.S. Employer Identification No.)
Intercontinental Business Park
15402 Vantage Parkway East, Suite 322
Houston, Texas		77032
(Address of Principal Executive Offices)		(Zip Code)
	(281) 219-4700
	(Registrant’s Telephone Number)

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, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of October 22, 2005 there were 50,572,986 shares of Common Stock, par value $.01, outstanding.

ITEMS AMENDED HEREBY

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The information presented herein reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. located in Arizona that was acquired on February 11, 2005 and merged into IFT Corporation as described above. Please find below a description of the items amended hereby:

(A)  Reclassification of Continuing and Discontinued Operations - The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the Securities and Exchange Commission (“SEC”) based on guidance received from the SEC regarding the manner in which the continuing and discontinued operations were originally presented and determined that certain reclassifications were required to make the presentation conform to applicable accounting principles. The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The Infiniti Subsidiary was acquired effective September 1, 2001. The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to our discontinued operations from our continuing operations. The aggregate financial data originally presented was not affected by the reclassification.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reevaluated the Condensed Consolidated Statements of Operations as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which other similarly situated public companies, like us, record certain direct labor expenses, shipping and handling costs, and warehousing costs, and determined that certain reclassifications were required to make the Company’s Condensed Consolidated Statements of Operations comparable to other similarly situated public companies. The Company recorded certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs, and warehousing costs as Selling, General and Administrative. The aggregate amount of costs and expenses of the Company originally presented were not affected by these reclassifications. The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item.

(C)  Restatement of Inventory and Cost of Sales- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC in paragraph (B) above and Accounting Research Bulletin 43, Chapter 4, regarding the manner in which the acquisition and production costs relating to inventory were recorded and determined that a restatement of the value of inventory was necessary to make the presentation conform to applicable accounting principles. The Company recorded certain acquisition and production direct and indirect costs in the Costs of Sales line item related to manufacturing and distribution operations which should have been capitalized and included as part of the cost of acquisition and production of inventory. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in (A) and (B) above, restated the value of Inventories on the Condensed Consolidated Balance Sheets and Cost of Sales on the Condensed Consolidated Statements of Operations.

(D)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company reevaluated the condensed consolidated financial statements and related notes as originally presented and filed with the SEC based on guidance received from the SEC regarding the manner in which the allowance for doubtful accounts was calculated and determined that a restatement was necessary to make the presentation conform to applicable accounting principles. As described in paragraph (A) above, the Company discontinued certain operations, one of which was its wholly-owned subsidiary RSM Technologies, Inc. (“RSM Subsidiary”), on November 5, 2004. The RSM Subsidiary’s operations related to the former RSM Products, which products were initially distributed through the Infiniti Subsidiary. The Infiniti Subsidiary also distributed its own Infiniti Products. The Infiniti Subsidiary’s accounting policy with respect to the method and percentages used to determine the valuation allowance for uncollectible receivables was based primarily on the historical data relating to bad debts of the former RSM products. The Company acquired LaPolla Industries, Inc., an Arizona corporation, on February 11, 2005 (the “LaPolla Subsidiary”), which adopted the aforementioned Infiniti Subsidiary’s accounting policy to be consistent at the time. The Company, after the reclassifications in paragraph (A) above, reevaluated the historical data relating to bad debts for the Infiniti Products and determined a change in method and percentages used to calculate the valuation allowance for uncollectible receivables was required for the year 2004. The Company changed the method from the aging method to the percentage-of-sales method and adjusted the percentage used to match the historical data relating to bad debts and credit sales of the Infiniti Products for the year 2004. The Company reevaluated the percentage-of-sales method and percentage used for the 2004 year again for the first, second and third quarters of 2005 against the historical data relating to bad debts and credit sales of the Infiniti Products and LaPolla Products and determined that the 2004 year criteria was also appropriate for the first, second and third quarters of 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C), restated the allowance for doubtful accounts on the Condensed Consolidated Balance Sheets and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations.

The Company has fully updated all affected portions of this amended report, including the condensed consolidated financial statements and related notes and MD&A, to reflect the reclassifications and restatements described above. In addition, certain scrivener’s errors and captions in the condensed consolidated financial statements and related notes and disclosures have been updated throughout this amended report to make the presentation more useful, informative, transparent, and comparative.

A-2

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

FORM 10-Q/A

FOR THE QUARTER ENDED SEPTEMBER 30, 2005

INDEX

		Page
PART I — FINANCIAL INFORMATION
	Item 1.  Financial Statements	A-4
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	A-14
	Item 3.  Quantitative and Qualitative Disclosures About Market Risk	A-17
	Item 4.  Controls and Procedures	A-17
PART II — OTHER INFORMATION
	Item 1.  Legal Proceedings	A-18
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	A-18
	Item 3.  Defaults Upon Senior Securities	A-18
	Item 4.  Submission of Matters to a Vote of Security Holders	A-18
	Item 5.  Other Information	A-18
	Item 6.  Exhibits	A-18
SIGNATURES		A-19
INDEX OF EXHIBITS		A-20

A-3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

INDEX TO FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES

CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30, 2005 (Unaudited) and December 31, 2004	A-5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three and Nine Months Ended September 30, 2005 and 2004	A-6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Nine Months Ended September 30, 2005 and 2004	A-7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		A-8

All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are not applicable, and therefore have been omitted.

A-4

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2005			2004
	Restated			Restated
	(Unaudited)
ASSETS
Current Assets:
Cash	$	357,706		$	24,465
Trade Receivables, Net		3,587,612			691,926
Inventories		941,939			267,995
Prepaid Expenses and Other Current Assets		104,584			41,053
Assets of Discontinued Operations		2,500			438
Total Current Assets		4,994,341			1,025,877
Property, Plant and Equipment, Net		546,956			287,784
Other Assets:
Goodwill and Other Intangible Assets, Net		2,145,245			774,000
Deposits and Other Non-Current Assets		143,768			56,471
Total Other Assets		2,289,013			830,471
Total Assets	$	7,830,310		$	2,144,132
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
Current Liabilities:
Accounts Payable	$	3,958,573		$	1,126,847
Accrued Expenses and Other Current Liabilities		336,952			471,008
Lines of Credit		62,665			219,152
Loans Payable - Related Party		4,302,500			5,670,000
Note Payable - Other		1,250,000			—
Current Portion of Long-Term Debt		49,548			24,582
Current Portion of Liabilities from Discontinued Operations		735,315			1,220,485
Total Current Liabilities		10,695,553			8,732,074
Other Liabilities
Non-Current Portion of Long-Term Debt		132,775			14,243
Non-Current Portion of Liabilities from Discontinued Operations		140,642			525,000
Reserve for Litigation		175,378			15,000
Total Other Liabilities		448,795			554,243
Total Liabilities	$	11,144,348		$	9,286,317
Stockholders’ (Deficit):
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of which Designations:
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued and Outstanding (Less Offering Costs of $7,465) at September 30, 2005 and December 31, 2004; $62,500 aggregate liquidation preference at September 30, 2005 and December 31, 2004		55,035			55,035
Common Stock, $.01 Par Value; 60,000,000 Shares Authorized; 50,572,986 and 2,014,369 Issued and Outstanding at September 30, 2005 and December 31, 2004, respectively		505,730			320,144
Additional Paid-In Capital		59,958,097			53,625,390
Accumulated (Deficit)		(63,832,900	)		(61,142,754	)
Total Stockholders’ (Deficit)		(3,314,038	)		(7,142,185	)
Total Liabilities and Stockholders’ (Deficit)	$	7,830,310		$	2,144,132

See accompanying notes to condensed consolidated financial statements.

A-5

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	Restated			Restated			Restated			Restated
Sales:
Coatings, Sealants and Other Products	$	5,559,461		$	521,852		$	13,223,290		$	1,569,378
Total Sales		5,559,461			521,852			13,223,290			1,569,378
Cost of Sales:
Coatings, Sealants and Other Products		4,438,514			433,405			10,826,805			1,262,988
Total Cost of Sales		4,438,514			433,405			10,826,805			1,262,988
Gross Profit		1,120,947			88,447			2,396,485			306,390
Operating Expenses:
Selling, General and Administrative		1,509,665			320,120			4,219,879			1,611,317
Professional Fees		45,465			57,000			438,683			322,521
Depreciation and Amortization		25,009			16,424			73,721			58,092
Consulting Fees		51,203			51,144			176,595			122,137
Interest Expense		22,787			9,797			51,329			55,589
Interest Expense - Related Party		91,114			101,493			173,458			184,898
Gain (Loss) on Disposal of Property, Plant and Equipment		—			—			—			761
Other (Income) Expense		(5,269	)		26,148			(22,511	)		26,148
Total Operating Expenses		1,739,973			582,126			5,111,154			2,381,463
Operating (Loss)		(619,026	)		(493,679	)		(2,714,669	)		(2,075,073	)
Income (Loss) from Discontinued Operations		349,117			(1,764,031	)		24,526			(3,418,211	)
Net (Loss)	$	(269,909	)	$	(2,257,710	)	$	(2,690,143	)	$	(5,493,284	)
Net Income (Loss) Per Share-Basic and Diluted:
Continuing Operations	$	(0.012	)	$	(0.017	)	$	(0.054	)	$	(0.071	)
Discontinued Operations		0.006			(0.061	)		0.000			(0.117	)
Total (Loss)	$	(0.006	)	$	(0.078	)	$	(0.054	)	$	(0.188	)
Weighted Average Shares Outstanding		50,306,865			28,921,173			50,351,466			28,830,536

____________________

(A)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the three and nine months ended September 30, 2005. The reclassification affected Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales which each increased $172,352 and $391,829; Gross Profit decreased $172,352 and $391,829; Selling, General and Administrative decreased $155,410 and $357,641; Depreciation and Amortization decreased $16,942 and $34,188; and Total Operating Expenses decreased $172,352 and $391,829, for the three and nine months ended September 30, 2005, respectively.

(B)  Restatement of Inventory and Cost of Sales - The Company, after the reclassification in paragraph (A) above, restated the value of Inventories on the Consolidated Balance Sheets for quarter ended September 30, 2005 and Cost of Sales on the Consolidated Statements of Operations for the for the three and nine months ended September 30, 2005. Inventories, Total Current Assets, and Total Assets each increased $105,132 for the quarter ended September 30, 2005; and Coatings, Sealants and Other Products in the Cost of Sales line item and Total Cost of Sales each decreased $40,329 and $92,719; Gross Profit increased $40,329 and $92,719; and Operating Loss and Net Loss each decreased $40,329 and $92,719, for the three and nine months ended September 30, 2005, respectively. No income tax effects were related to this restatement. See Note 18, paragraph (C) for illustrative requirement.

(C)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassification in paragraph (A) and restatement in paragraph (B) above, restated the Allowance for Doubtful Accounts for the quarter ended September 30, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three and nine months ended September 30, 2005. Allowance for Doubtful Accounts increased $27,797 and Total Current Assets and Total Assets each decreased $27,797, for the quarter ended September 30, 2005; and Selling, General and Administrative, Operating Loss, and Net Loss each increased $9,402 and decreased $10,709, for the three and nine months ended September 30, 2005, respectively. No income tax effects were related to this restatement. See Note 18, paragraph (D) for illustrative requirement.

See accompanying notes to condensed consolidated financial statements.

A-6

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2005			2004
	Restated			Restated
Cash Flows From Operating Activities
Net (Loss)
Continuing Operations	$	(2,714,672	)	$	(2,075,073	)
Discontinued Operations		24,526			(3,418,211	)
Adjustments to Reconcile Net (Loss) to Net Cash Provided by (Used in) by Operating Activities:
Depreciation and Amortization		107,492			58,092
Provision for Losses on Trade Receivables		53,295			—
Loss on Disposition of Property, Plant and Equipment		(2,657	)		26,909
Stock Based Operating Expenses:
Other Compensation		178,980			9,634
Board of Director Fees		339,290			251,820
Changes in Assets and Liabilities, Net of Effects from Purchase of LaPolla Subsidiary
Trade Receivables		(1,436,770	)		107,987
Inventories		(362,374	)		(19,698	)
Prepaid Expenses and Other Current Assets		(166,941	)		(96,269	)
Deposits and Other Non Current Assets		(68,283	)		12,420
Accounts Payable		1,663,572			(253,973	)
Accrued Expenses and Other Current Liabilities		57,857			97,494
Other Liabilities		184,420
Reserve for Litigation		160,378			15,000
Net Operating Activities of Discontinued Operations		(800,179	)		695,517
Net Cash (Used in) Operating Activities		(2,782,066	)		(4,588,351	)
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment	$	(307,959	)	$	(178,405	)
Payment for Purchase of LaPolla Subsidiary, Net of Cash Acquired		(1,931,825	)		—
Net Investing Activities of Discontinued Operations		—			2,100
Net Cash Provided by (Used in) Investing Activities		(2,239,784	)		(176,305	)
Cash Flows From Financing Activities
Proceeds from the Issuance of Stock	$	—		$	—
Proceeds from Line of Credit		25,594			12,043
Payments on Line of Credit		(182,082	)		(9,600	)
Proceeds from Loans Payable - Related Party		4,302,500			4,825,000
Proceeds from Note Payable - Other		1,250,000			—
Principal Repayments on Long Term Debt		(39,143	)		(4,052	)
Principal Payments under Capital Lease Obligation		(1,778	)		(1,536	)
Net Financing Activities of Discontinued Operations		—			(29,781	)
Net Cash Provided by Financing Activities		5,355,091			4,792,074
Net Increase In Cash	$	333,241		$	27,418
Cash at Beginning of Period		24,465			35,385
Cash at End of Period	$	357,706		$	62,803
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Income Taxes	$	—		$	—
Cash Payments for Interest	$	34,579		$	69,815
Supplemental Schedule of Non Cash Investing and Financing Activities
Property, Plant and Equipment acquired via a Capital Lease Obligation	$	-		$	7,200
Property, Plant and Equipment acquired via issuance of Long Term Debt		327,082			—
Grant Date Fair Value Recognized for Share-Based Payment Arrangements		168,020			—
Common Stock issued as Other Compensation pursuant to Employment Agreements		10,960			9,634
Common Stock issued as Director Fees pursuant to Director Compensation Plan		339,290			251,820
Common Stock issued in connection with Acquisition of Business Entity		22			—
Common Stock extinguished pursuant to Settlement Agreement		—			(131,508	)
Common Stock issued upon Conversion of Preferred Stock		—			674,315
Common Stock issued upon Cancellation of Indebtedness	$	6,000,000		$	—

See accompanying notes to condensed consolidated financial statements.

A-7

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Basis of Presentation.

Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. See also Note 17 - Subsequent Events, Items (b) and (c). The unaudited condensed consolidated financial statements and related notes reflect the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation subsequent to the current period. To be clear, references to the former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this presentation to aid the reader in understanding the current period presentation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary (consisting only of normal recurring accruals) to present fairly the financial information contained therein. These statements do not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP) for annual periods and should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the year ended December 31, 2004, including any amendments thereto, as filed with the Securities and Exchange Commission. The Company prepared the condensed consolidated financial statements following the requirements of the rules promulgated by the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. The results of operations for the nine months ended September 30, 2005 are not necessarily indicative of the results to be expected for the year ending December 31, 2005 or any other period(s).

Note 2. Reclassifications and Changes in Presentation.

Certain amounts in the prior years have been reclassified to conform to the 2005 unaudited condensed consolidated financial statement presentation. The Company has separately disclosed the operating, investing and financing portion of the cash flows attributable to its discontinued operations.

Note 3. Recently Adopted Accounting Standards.

In December 2004, Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“SFAS 123R”), was issued. SFAS 123R requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees. On March 29, 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 107 (“SAB 107”), “Share-Based Payment”. SAB 107 expresses the views of the SEC staff regarding the interaction between SFAS No. 123R and certain SEC rules and regulations, provides the staff’s views regarding the valuation of share-based payments by public companies, and provides guidance regarding share-based payments with non-employees. SFAS 123R sets accounting requirements for measuring, recognizing and reporting share-based compensation, including income tax considerations. In general, SFAS 123R does not express a preference for a type of valuation model for measuring the grant date fair value, generally requires equity- and liability-classified awards to be recognized in earnings over the requisite service period, generally the vesting period for service condition awards, allows for a one-time policy election regarding one of two alternatives for recognizing compensation cost for grant awards with graded vesting, and requires the use of the estimated forfeitures method. The Company adopted reporting under SFAS 123R, effective July 1, 2005 and began recognizing the cost of equity-based compensation using the modified prospective application method, whereby the cost of new awards and awards modified, repurchased or cancelled after the required effective date and the portion of awards for which the requisite service has not been rendered (unvested awards) that are outstanding as of the required effective date are recognized as the requisite service is rendered on or after the required effective date. See also Note 12 - Share-Based Payment Arrangements.

Note 4. Going Concern.

While the accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during the normal course of operations, certain adverse conditions and events cast doubt upon the validity of this assumption. The Company has experienced significant recurring operational losses and negative cash flows from operations, and at September 30, 2005 has an accumulated deficit, net of dividends, of $63,832,900, a working capital deficit of $5,701,212 and its total liabilities exceeded its total assets by $3,314,038. These factors raise doubt about the Company’s ability to continue as a going concern. The Company has relied principally on non-operational sources of financing, mainly from Richard J. Kurtz, Chairman of the Board (“Chairman”), to fund its operations for approximately seven years. Although the Company had no formal commitment from the Chairman to fund the Company’s operating requirements for the 2005 year, the Company received short term demand loans from the Chairman during the first half of the 2005 year to continue its operations. As of September 30, 2005, the Company’s indebtedness to the Chairman consists of $4,302,500, plus accrued interest of $147,412. See also Note 9 - Loans Payable - Related Party. On June 2, 2005, the Company (and the Chairman for added security) signed a Promissory Note with a national institution granting access to funds in the amount of $2,000,000, which may be drawn against from time to time by the Company for operations. See Note 10 - Note Payable - Other. The Company’s ability to continue as a going concern is dependent on management’s ability to successfully execute its business plan, which includes increasing sales while decreasing operating costs and expenses, as well as, increasing operational cash flow, continued support from the Chairman, and obtaining additional funding to support longer term capital requirements. If management is unsuccessful in obtaining one or more of the above mentioned goals, the Company’s ability to continue as a going concern would be adversely impacted. These financial statements do not include adjustments or disclosures that may result from the Company’s inability to continue as a going concern.

Note 4. Trade Receivables.

Trade receivables are comprised of the following:

	September 30, 2005			December 31, 2004
Trade Receivables	$	3,653,728		$	704,747
Less: Allowance for Doubtful Accounts		(66,116	)		(12,821	)
Trade Receivables, Net	$	3,587,612		$	691,926

A-8

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 5. Inventories.

Inventories are comprised of the following:

	September 30, 2005		December 31, 2004
Raw Materials	$	386,195	$	65,920
Finished Goods		555,744		202,074
Total	$	941,939	$	267,995

Note 6. Property, Plant and Equipment.

Property, Plant and Equipment are comprised of the following:

	September 30, 2005			December 31, 2004
Vehicles	$	246,290		$	137,822
Leasehold Improvements		14,191			62,278
Office Furniture and Equipment		93,713			70,195
Computers and Software		207,335			192,284
Displays		62,278			—
Machinery and Equipment		325,246			133,273
Total Property, Plant and Equipment	$	949,053		$	595,852
Less: Accumulated Depreciation		(402,097	)		(308,068	)
Total Property, Plant and Equipment, Net	$	546,956		$	287,784

Note 7. Goodwill and Other Intangible Assets.

Goodwill

	September 30, 2005		December 31, 2004
Infiniti Subsidiary	$	—	$	774,000
LaPolla Subsidiary		1,951,000		—
	$	1,951,000	$	774,000

Other Intangible Assets

	September 30, 2005
	Gross		Accumulated			Amortization
	Amount		Amortization			Period
Customer List	$	69,235	$	(8,078	)		5 Years
Product Formulation		138,471		(5,383	)		15 Years
	$	207,706	$	(13,461	)

The Customer List and Product Formulation were acquired in connection with the acquisition of the LaPolla Subsidiary.

Note 8. Line of Credit.

Line of credit is comprised of the following:

	September 30, 2005		December 31, 2004
$180,000 Line of Credit, maturing February 1, 2006, bears interest at prime plus 1% per annum, secured by all the assets of the LaPolla Subsidiary and a personal guarantee from the Chairman of the Board.	$	62,665	$	219,152

Note 9. Loans Payable - Related Party.

Loans Payable - Related Party is comprised of funds loaned to the Company for working capital and other corporate purposes from the Chairman. These loans are payable upon demand, unsecured and bear interest at 9% per annum through December 31, 2004, and at 6% per annum for the nine months ended September 30, 2005. During the period from January 1, 2005 to May 20, 2005, the Chairman loaned the Company funds aggregating $4,302,500; $2,000,000 of which was used for the purchase of the LaPolla Subsidiary on February 11, 2005.

Note 10. Note Payable - Other.

On June 2, 2005, the Company and the Chairman signed a Promissory Note with a national institution granting the Company access to funds in the amount of $2,000,000, which may be drawn against from time to time for the operations of the Company. During the third quarter, the Company used $750,000, which added to the $500,000 used during the second quarter of 2005, represents the balance as of September 30, 2005. The Note bears interest at a rate equal to 1-month LIBOR plus two and one-quarter percent (2.25) per annum (“LIBOR-Based Rate”), and has a maturity date of June 1, 2006. See also Note 17 - Subsequent Events, Item (a).

A-9

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 11. Net (Loss) Per Common Share - Basic and Diluted.

The following table reflects the computation of the basic and diluted net loss per common share:

	Three Months Ended September 30,												Nine Months Ended September 30,
	2005						2004						2005						2004
				Per Share						Per Share						Per Share						Per Share
	Amount			Amount			Amount			Amount			Amount			Amount			Amount			Amount
Operating (Loss)	$	619,026		$	(0.012	)	$	(493,679	)	$	(0.017	)	$	2,714,669		$	(0.054	)	$	(2,075,073	)	$	(0.071	)
Income (Loss) from Discontinued Operations		349,117			0.006			(1,764,031	)		(0.061	)		24,526			0.000			(3,418,211	)		(0.117	)
Net (Loss)	$	(269,909	)	$	(0.006	)	$	(2,257,710	)	$	(0.078	)	$	(2,690,143	)	$	(0.054	)	$	(5,493,284	)	$	(0.188	)
Weighted Average Common Shares Outstanding		50,306,865						28,921,173						50,351,466						28,830,536

Basic and diluted net (loss) per share are the same since (a) the Company has reflected net losses for all periods presented and (b) the potential issuance of shares of the Company would be antidilutive. The securities that could potentially dilute (loss) per share in the future that were not included in the computation of diluted (loss) per share were (i) 364,000 and 680,000 shares, respectively, of nonvested restricted common stock issued to eligible directors but held by the Company pursuant to vesting restrictions under the Director Compensation Plan, (ii) exercise of 183,368 and 213,774 vested stock options, respectively, and (iii) conversion of securities (preferred stock) convertible into 2,250 and 2,250 shares, respectively, of common stock, for the three and nine months ended September 30, 2005 and 2004, respectively.

Note 12. Share-Based Payment Arrangements.

The Company adopted reporting under SFAS 123R, effective July 1, 2005. SeeNote 3 - Recently Adopted Accounting Standards. Previously, as allowed by Statement of Financial Accounting Standards No. 123, “Accounting for the Stock-Based Compensation”, the Company elected to apply the intrinsic-value-based method of accounting. Under this method, the Company measured stock based compensation for option grants to employees assuming that options granted at market price at the date of grant had no intrinsic value and restricted stock awards were valued based on a discounted market price of a share of unrestricted stock on the date the shares of restricted common stock were earned and vested. Prior to the adoption of the SFAS 123R, no compensation expense was ever recognized for stock options while compensation expense was recognized for restricted common stock only on the date when the shares were earned and vested. The Company has elected to use the modified prospective method, which requires compensation expense for all awards granted from the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption, to be recorded. The fair value concepts were not changed significantly in SFAS 123R; however, in adopting SFAS 123R, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will begin using a lattice-based option valuation model to calculate compensation expense over the requisite service period of a grant(s). The Company uses historical data starting after November 5, 2004 for estimated forfeitures and volatility based on the concentration of operating activities for the preceding seven years being related to the RSM Products, which were discontinued on November 5, 2004.

During the third quarter of 2005, the Company had four share-based compensation plans, which are described below. The compensation cost that has been charged against income for those plans was $173,380 and $1,060, respectively, for the three months ended September 30, 2005 and 2004, respectively, and $518,270 and $261,454, respectively, for the nine months ended September 30, 2005 and 2004, respectively.

Equity Incentive Plan

The Company’s Equity Incentive Plan (“Equity Plan”), which is shareholder-approved, permits the grant of share options and shares to its employees for up to 3,250,000 shares of common stock. The Equity Plan replaced the Key Employee Stock Option Plan. The 2000 Stock Purchase and Option Plan, which was shareholder-approved, was amended by the Company to change its name to the Key Employee Stock Option Plan, combine its terms and conditions with the 2002 Stock Option Plan (which was also shareholder-approved), and eliminate consultants and directors as Eligible Persons. The purpose of the Equity Plan is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Company and by motivating such persons to contribute to the growth and profitability of the Company. The Equity Plan provides, among other things, financial performance measures upon which specific performance goals applicable to certain awards would be based and limits on the numbers of shares or compensation that could be made subject to certain awards. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Share options and shares may provide for accelerated vesting if there is a change in control (as defined in the Equity Plan). As described above, prior to the adoption of SFAS 123R, compensation expense was never recognized by the Company for share options. Therefore, certain portions of the following analysis only relate to share options beginning as of the adoption date for the current period presentation.

The fair value of each share option and share is estimated on the date of grant using a lattice-based valuation model that uses the assumptions noted in the following table. Because lattice-based valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatilities are based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the valuation model and represents the periods of time that options granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005			2004		2005			2004
Expected Volatility		152.73 % - 152.95	%		—		152.73 % - 152.95	%		—
Weighted-Average Volatility		152.92	%		—		152.92	%		—
Expected Dividends		—			—		—			—
Expected Term (in years)		1.2 - 6			—		1.2 - 6			—
Risk Free Rate		2.879 % - 3.259	%		—		2.879 % - 3.259	%		—

A-10

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 12. Share-Based Payment Arrangements - continued.

A summary of option activity under the Equity Plan as of September 30, 2005, and changes during the nine months then ended is presented below:

Options	Shares			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2005		115,321		$	3.16
Granted		2,954,680			.67
Exercised		—			—
Forfeited or Expired		(50,133	)		.86
Outstanding at September 30, 2005		3,019,868		$	.76		1.81	$	2,300,635
Exercisable at September 30, 2005		113,368		$	3.11		1.13	$	353,085

The weighted-average grant-date fair value of options granted during the three months ended September 30, 2005 was $.56. There were no options exercised during the three months ended September 30, 2005.

A summary of the status of the nonvested share options under the Equity Plan as of September 30, 2005, and changes beginning from the date of adoption of SFAS 123R to the nine months then ended is presented below:

Nonvested Awards	Shares			Weighted-Average Grant-Date Fair Value
Nonvested at July 1, 2005		24,000		$	.49
Granted		2,940,000			.57
Vested		(12,500	)		.29
Forfeited		(45,000	)		.64
Nonvested at September 30, 2005		2,906,500		$	.57

As of September 30, 2005, there was $1,540,018 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Equity Plan. The cost is expected to be recognized over a weighted-average period of 2.73 years. During the three months ended September 30, 2005, the Company accelerated the vesting of an aggregate of 12,500 out-of-the-money options held by the CEO (6,500 options) and two employees (6,000 options). As a result of that modification, the Company recognized additional compensation expense of $3,626 in the current period. The total fair value of share options vested during the three months ended September 30, 2005 was $3,626.

Director Compensation Plan

The Company’s Director Compensation Plan (“Director Plan”), which is shareholder-approved, permits the grant of up to 1,600,000 shares of restricted common stock to non-employee directors only. Each non-employee director who is then serving as a member of the Board is automatically granted an award consisting of a number of shares of restricted common stock of the Company equal to: 48,000 for the Chairman of the Board, who is also a non-employee director; and 12,000 for other non-employee directors, upon initial election to the Board for a one year term (or a lesser amount prorated monthly if the initial election is for a shorter period).  In addition to the automatic grant of shares to non-employee directors described above, a one-time grant on May 28, 2002 of 1,168,000 post split shares of restricted stock was approved for the Chairman of the Board, which recognized his personal cost for substantially funding the Company and acting as Chairman of the Board without adequate compensation over a three-year period prior to the date of the grant. This one-time grant vests at the end of each year at the rate of 25% per year. The Company does not consider the shares of restricted common stock granted and issued under the Director Plan as outstanding at the time of grant due to vesting restrictions. The shares of restricted common stock when granted are issued by the Company with a second restriction and held in the custody of the Company until such time that they are earned and vested.

At September 30, 2005, there were 364,000 shares of restricted common stock granted and issued but held in the custody of the Company (until they are earned and vested), of which 292,000 shares are for the last 25% of the one time grant scheduled to vest on May 28, 2006 and 72,000 are for automatic grants awarded at the annual meeting of stockholders held on June 29, 2005 which vest at the next annual meeting of stockholders scheduled for May 23, 2006. The compensation cost that has been charged against income for the Director Plan was $44,676 and $-0-, respectively, for the three months ended September 30, 2005 and 2004, respectively, and $383,966 and $251,820, respectively, for the nine months ended September 30, 2005 and 2004, respectively. Prior to the adoption of SFAS 123R, compensation expense was recognized under the Director Plan only on the date when the shares were earned and vested. Therefore, the grant date fair value portions of the following analysis only take into consideration the 364,000 shares of restricted common stock granted and nonvested as described above for the current period presentation. The fair value of each award is estimated on the date of grant using a lattice-based valuation model that uses the assumptions noted in the following table. Because lattice-based valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed, where applicable. Expected volatilities are based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate award vesting and director termination within the valuation model and the straight-line method for attribution of compensation expense. The expected term of the of the awards are derived from the output of the valuation model and represent the period of time that awards granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the award is based on the U.S. Treasury yield curve in effect at the time of grant.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005			2004		2005			2004
Expected Volatility		152.73	%		—		152.73	%		—
Weighted-Average Volatility		152.73	%		—		152.73	%		—
Expected Dividends		—			—		—			—
Expected Term (in years)		.9			—		.9			—
Risk Free Rate		3.259	%		—		3.259	%		—

A-11

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 12. Share-Based Payment Arrangements - continued.

A summary of awards activity under the Director Plan as of September 30, 2005, and changes during the nine months then ended is presented below:

Awards	Shares		Aggregate Intrinsic Value
Outstanding at January 1, 2005		652,767
Granted		72,000
Vested		360,767
Forfeited or Expired		—
Outstanding at September 30, 2005		364,000	$	309,400

A summary of the status of the nonvested awards under the Director Plan as of September 30, 2005, and changes beginning from the date of adoption of SFAS 123R to the nine months then ended is presented below:

Nonvested Awards	Shares		Weighted-Average Grant-Date Fair Value
Nonvested at July 1, 2005		364,000	$	162,000
Granted		—		—
Vested		—		—
Forfeited		—		—
Nonvested at September 30, 2005		364,000	$	162,000

As of September 30, 2005, there was $117,324 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Director Plan. The cost is expected to be recognized over a weighted-average period of .65 years. The total fair value of awards vested during the three months ended September 30, 2005 and 2004, respectively, was $-0- and $-0-, respectively, and nine months ended September 30, 2005 and 2004, respectively, was $339,290 and $251,820, respectively.

Non Plan Restricted Stock Options

The Company grants restricted options from time to time for special circumstances ("Non Plan Options").  The Company did not grant any Non Plan Options during 2004 or the three and nine months ended September 30, 2005.  At January 1, 2005, there were 70,000 Non Plan Options outstanding, of which 20,000 were vested and 50,000 nonvested. During the three months ended September 30, 2005, the Company accelerated the vesting of the 50,000 outstanding and nonvested options, which not only were out-of-the-money but the expected term was also expired in 2004. Therefore, notwithstanding the aforementioned acceleration, no fair value existed or was recorded for current period for Non Plan Options. As described above, prior to the adoption of SFAS 123R, compensation expense was never recognized by the Company for any share options.

Restricted Stock Grants - Employment Agreements

During the three months ended September 30, 2005, the Company accelerated and issued an aggregate of 8,000 shares of restricted common stock to the CEO, originally scheduled to vest in 4,000 share increments at the end of the third and fourth quarters of 2005 as other compensation, pursuant to an employment agreement, which were valued and recorded at $5,360. As described above, the Company did not recognize the fair value of restricted stock awards prior to the adoption of SFAS 123R until such time that they were earned and vested. As of September 30, 2005, there were no outstanding restricted stock grants.

Note 13. Discontinued Operations.

On November 5, 2004, the Company discontinued the operations of its RSM Technologies, Inc. subsidiary (“RSM Subsidiary”). The condensed consolidated financial statements and the related notes have been recast to reflect the financial position, results of operations and cash flows on an aggregated basis for the RSM Subsidiary.

The assets and liabilities of the discontinued operations presented on an aggregated basis in the Condensed Consolidated Balance Sheets consist of the following at:

Assets	September 30, 2005		December 31, 2004
Prepaid Expenses and Other Current Assets	$	2,500	$	438
Total Assets	$	2,500	$	438
Liabilities
Accounts Payable		235,397		662,696
Accrued Expenses and Other Current Liabilities		—		57,871
Line of Credit		499,918		499,918
Reserve for Litigation		140,642		525,000
Total Liabilities	$	875,957	$	1,745,485

Note 14. Merger of Subsidiary.

Effective April 1, 2005, Infiniti Products, Inc. (“Infiniti Subsidiary”), a Florida corporation, merged with and into the LaPolla Subsidiary, an Arizona corporation, whereupon the separate existence of Infiniti ceased and the LaPolla Subsidiary continued as the surviving corporation.

A-12

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 15. Business Segment Information.

Effective April 1, 2005, the Company determined that it had two distinct business segments. These two business segments were defined as Corporate and LaPolla Products. On April 1, 2005, the Company’s Infiniti Subsidiary (See Note 14 - Merger of Subsidiary) merged with and into the LaPolla Subsidiary and, therefore, the Infiniti Subsidiary business segment, formerly reflected as Infiniti Products, has been combined with and into the LaPolla Products segment.

The business segment financial data reflected in the table below was derived from the Company’s condensed consolidated financial position and condensed consolidated results of operations as follows:

(i) Corporate was derived from the financial data of the Company; and

(ii) LaPolla Products was derived from the financial data of the LaPolla Subsidiary.

The following table reflects certain business segment financial data as of and for the nine months ended September 30, 2005:

	Corporate			LaPolla Products			Total
Sales	$	---		$	13,223,290		$	13,223,290
Gross Profit	$	---		$	2,396,485		$	2,396,485
Operating (Loss)	$	(2,261,135	)	$	(429,008	)	$	(2,690,143	)
Capital Expenditures (Net of Capital Leases)	$	81,728		$	434,930		$	516,658
Depreciation and Amortization Expense	$	52,586		$	23,135		$	73,721
Identifiable Assets	$	2,876,193		$	4,954,117		$	7,830,310

On November 5, 2004, the Company discontinued the operations of its RSM Subsidiary and the related business segment, formerly reflected as RSM Products, was eliminated at that time. The table above does not include any financial data relating to the discontinued RSM Products business segment, which is reported as discontinued operations in the Company’s financial statements. See alsoNote 13 - Discontinued Operations.

On October 1, 2005, the Company merged its LaPolla Subsidiary into itself. See alsoNote 14 - Merger of Subsidiary and Note 17 - Subsequent Events, Item (b). Based on the recent mergers, the Company, in future reporting periods, will no longer provide business segment data and information using the above business segment format. The Company is in the process of developing a new business segment reporting format, which will report the data and information required under SFAS 131 by product categories in future reporting periods.

Note 16. Commitments and Contingencies.

Reserve

	September 30, 2005		December 31, 2004
Accounts Payable - Discontinued Operations	$	235,397	$	662,696
Accrued Expenses and Other Current Liabilities - Discontinued Operations		—		57,871
Line of Credit - Discontinued Operations		499,918		499,918
Reserve for Litigation - Discontinued Operations		140,642		525,000
Reserve for Litigation - Current Operations		175,378		15,000
Total	$	1,051,335	$	1,760,485

Note 17. Subsequent Events.

(a)   The Company borrowed an additional $250,000 under the Note Payable for working capital purposes. SeeNote 10 - Note Payable - Other.

(b)   Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, the LaPolla Subsidiary, an Arizona corporation, into itself pursuant to the resolution of the board of directors of each respective entity, whereupon the separate existence of the LaPolla Subsidiary ceased and IFT Corporation continued as the surviving corporation.

(c)   Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc.

Note 18. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements.

(A)  Reclassification of Continuing and Discontinued Operations - The Company discontinued certain operations that took place during the years 2000 throughout 2004. At December 31, 2004, the current operations in effect related to the public company itself as a holding company and one wholly owned subsidiary, Infiniti Products, Inc. (“Infiniti Subsidiary”). The original report filed with the SEC did not fully separate and segregate all of the financial and other related information related to the Company’s discontinued operations from its continuing operations. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (A) for more information.

(B)  Reclassification of Certain Cost of Sales and Selling, General and Administrative Expenses - The Company reclassified certain direct labor expenses related to receiving, purchasing and inspection, shipping and handling costs (outbound freight) and warehousing costs originally included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations and included these amounts in the Cost of Sales line item for the three and nine months ended September 30, 2005. The aggregate financial data originally presented for the periods presented were not affected by the reclassification. See also Page A-2 - Items Amended Hereby, paragraph (B) for more information.

A-13

LAPOLLA INDUSTRIES, INC.

(F/K/A IFT CORPORATION)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED - CONTINUED)

Note 18. Reclassifications, Restatements, and Corrections to Previously Issued Financial Statements - continued.

(C)  Restatement of Inventory and Cost of Sales - The Company, after the reclassifications in paragraphs (A) and (B) above, restated the value of Inventories on the Consolidated Balance Sheets for the quarter ended September 30, 2005 and Cost of Sales on the Consolidated Statements of Operations for the for the three and nine months ended September 30, 2005. The aggregate amount of assets, cost of sales, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended September 30, 2005			Nine Months Ended September 30, 2005
Net Loss (As Previously Reported)	$	(300,836	)	$	(2,793,572	)
Adjustments		40,329			92,719
As Adjusted and Restated	$	(260,507	)	$	(2,700,853	)

See also Page A-2 - Items Amended Hereby, paragraph (C) for more information.

(D)  Restatement of Allowance for Doubtful Accounts and Bad Debt Expense- The Company, after the reclassifications in paragraphs (A) and (B) and restatement in paragraph (C) above, restated the Allowance for Doubtful Accounts for the quarter ended June 30, 2005, and Bad Debt expense included in the Selling, General and Administrative line item on the Condensed Consolidated Statements of Operations, for the three and six months ended June 30, 2005. The aggregate amount of assets, expenses, net loss, and accumulated deficit of the Company originally reported were affected by the restatement. To illustrate:

	Three Months Ended September 30, 2005			Nine Months Ended September 30, 2005
Net Loss (As Restated Per (C))	$	(260,507	)	$	(2,700,853	)
Adjustments		(9,402	)		10,709
As Adjusted and Restated	$	(269,909	)	$	(2,690,143	)

See also Page A-2 - Items Amended Hereby, paragraph (D) for more information.

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

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTERS ENDED SEPTEMBER 30, 2005 AND 2004

As used in this amended report, the "Company" or "Us" or "We" or “Our” refer to LaPolla Industries, Inc., a Delaware corporation, and its subsidiaries, unless the context otherwise requires. Effective October 1, 2005, IFT Corporation, a Delaware corporation, merged its wholly owned subsidiary, LaPolla Industries, Inc., an Arizona corporation, into itself, whereupon the separate existence of LaPolla Industries, Inc., an Arizona corporation, ceased and IFT Corporation continued as the surviving corporation. Effective November 8, 2005, IFT Corporation changed its corporate name to LaPolla Industries, Inc. The financial review reflects the new corporation name, LaPolla Industries, Inc., which is the same name previously associated with the Company’s former wholly owned subsidiary LaPolla Industries, Inc. that was merged into IFT Corporation immediately after the end of the current period. To be clear, references to this former wholly owned subsidiary are reflected as “LaPolla Subsidiary” or “LaPolla Products”, where applicable, in this review to aid the reader in understanding the current period review. The financial review below presents our operating results for the three and nine months ended September 30, 2005 and 2004, and our financial condition at September 30, 2005. Except for the historical information contained herein, the following discussion contains forward-looking statements, which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this report and specifically under the caption “Forward Looking Statements” below. In addition, the following review should be read in conjunction with the information presented in our unaudited condensed consolidated financial statements and related notes for the three and nine months ended September 30, 2005 above.

Overview

We are a public business enterprise that markets, sells, manufactures and distributes acrylic roof coatings, roof paints, sealers, roofing adhesives, polyurethane foam and wall systems, and other related products to the commercial/industrial construction and home improvement retail chain store markets. Prior to October 1, 2005, we were organized under a holding company and subsidiary structure. At September 30, 2004, we had two active subsidiaries, Infiniti Products, Inc. (“Infiniti Subsidiary”) and RSM Technologies, Inc. (“RSM Subsidiary”). We acquired our Infiniti Subsidiary, which was a Florida based coatings, sealants, paints, and foam distributor, effective September 1, 2001, to among other things, diversify our product lines (“Infiniti Products”). Our Infiniti Subsidiary started manufacturing some of its Infiniti Products instead of using outside toll blenders during the third quarter of 2004 as part of a strategy to become a manufacturer in addition to being a distributor for the Southeastern United States. On November 5, 2004, we discontinued the operations of our RSM Subsidiary and resulting RSM Products. The financial information relating to our discontinued RSM Subsidiary operations are reported and discussed as discontinued operations in our financial statements and this review. We implemented an aggressive sales and marketing strategy after discontinuing our RSM Products to substantially grow our Infiniti Products sales. During the first quarter of 2005, we engaged additional sales and marketing personnel in connection with our first acquisition to support our new strategic growth plan. On February 11, 2005, we closed our acquisition of the LaPolla Subsidiary, an Arizona based manufacturer of acrylic roof coatings and sealers, and provider of polyurethane foam systems to the commercial/industrial construction markets. We acquired 100% of the capital stock of the LaPolla Subsidiary for $2 Million in cash and stock. The LaPolla Subsidiary marketed, sold, manufactured and distributed acrylic roof coatings, sealers, and polyurethane foam systems to the commercial/industrial construction markets (“LaPolla Products”). The LaPolla™ name has been recognized in the Southwestern United States for over 27 years by roofing contractors, building owners and design professionals. The acquisition broadened our customer base and established us as a leader in the roof coatings industry. Effective April 1, 2005, our Infiniti Subsidiary merged with and into our LaPolla Subsidiary, whereupon the separate existence of our Infiniti Subsidiary ceased and the LaPolla Subsidiary continued as the surviving corporation. To be clear, references to our former wholly owned subsidiary, Infiniti Products, Inc., are reflected as “Infiniti Subsidiary” or “Infiniti Products”; our Infiniti Products and LaPolla Products are sometimes collectively referred to as “Comprehensive Products”; and our Infiniti Subsidiary and LaPolla Subsidiary are sometimes collectively referred to as “Combined Subsidiary”, where applicable, to aid the reader in understanding the current period review. We are continuing to attract and recruit the best available talent to manage our existing and further propel our growth. Our sales offices are located in Texas, Florida, Arizona, Georgia, California, and Pennsylvania. LaPolla operates two manufacturing plants located in Tempe, Arizona and Deerfield Beach, Florida, and uses public warehousing in a multitude of locations throughout the United States to service customers. We moved our corporate headquarters to Houston, Texas during the third quarter of 2005, and will begin manufacturing products at this location in the fourth quarter of 2005.

A-14

Results of Operations

We operated our business on the basis of two reportable segments, which we refer to as Corporate and LaPolla Products, during the third quarter of 2005. LaPolla Products are collectively referred to as “Coatings, Sealants and Other Products” in our condensed consolidated financial statements for this reporting period.   The following table compares 2005 and 2004 sales for the three and nine month periods ended September 30, 2005 and 2004:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Sales:
Coatings, Sealants and Other Products	$	5,559,461	$	521,852	$	13,223,290	$	1,569,378
Total Sales	$	5,559,461	$	521,852	$	13,223,290	$	1,569,378

The $5,037,609 or 965% increase in sales for the three months ended September 30, 2005 compared to the same 2004 period was primarily the result of an increase due to strong demand for our Comprehensive Products as compared to just our Infiniti Products in 2004. The increase in sales of $11,653,912, which represents an increase of 743% in sales for the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 was due primarily to sales of our Infiniti Products in the amount of $799,815, LaPolla Products of $1,657,838 and Comprehensive Products of $9,196,259 compared to just our Infiniti Products of $1,569,378.

Our cost of sales for the three months ended September 30, 2005 was $4,438,514, or 79.8%, as compared to $433,405, or 83%, for the three months ended September 30, 2004. The increase in the total cost of sales of $4,005,109 was primarily due to increased purchases of the raw materials and finished goods relating to the manufacturing and distribution of our Comprehensive Products as compared to just our Infiniti Products for 2004. This 3.2% decrease in cost of sales as a percentage of sales from the comparable 2004 period is attributable to the mix of Comprehensive Product margins as compared to just our Infiniti Products. For the nine months ended September 30, 2005, our cost of sales was $10,826,805, or 81.8%, as compared to $1,262,988, or 80.4%, for the nine months ended September 20, 2004. The $9,563,817 increase in cost of sales for the nine months ended September 30, 2005 compared to the same 2004 period was due primarily to cost of sales relating to our Infiniti Products in the amount of $594,253, LaPolla Products of $1,576,411 and Comprehensive Products of $8,656,141 compared to just our Infiniti Products of $1,262,988. Our cost of sales includes $73,861 and $14,235 for direct labor, receiving, purchasing and inspection, respectively, and $114,697 and $10,297 inbound and outbound freight, respectively, for the three months ended September 30, 2005 for our Combined Subsidiary and September 30, 2004 for our Infiniti Subsidiary, respectively. For the nine months ended September 30, 2005, our cost of sales include direct labor, receiving, purchasing and inspection, respectively, and inbound and outbound freight, respectively, of $8,900 and $9,331 for our Infiniti Subsidiary, $-0- and $18,095 for our LaPolla Subsidiary and $63,329 and $212,711 for our Combined Subsidiary, respectively, versus $23,972 and $25,169 for just our Infiniti Subsidiary, respectively, for the comparable 2004 period.

Gross profit as a percentage for the third quarter of 2005 was 20.1% of sales, which represents a 3.2 percentage point increase from the 16.9% rate for the third quarter of 2004. Our gross profit percentage increased in the third quarter of 2005 compared to the third quarter of 2004 primarily as a result of an increase in sales of higher margin products as compared to lower margin products. Gross profit as a percentage for the nine months ended September 30, 2005 was 18.1% of sales, which represents a 1.4 percentage point decrease from the 19.5% rate for the comparable 2004 period. The gross profit percentage decreased in the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004 primarily as a result of an increase in sales of lower margin products as compared to higher margin products.

Selling, general and administrative, or SG&A, expenses were $1,509,665 or 27.1% of sales, in the third quarter of 2005, of which $551,851 was for Corporate and $957,814 was for our Combined Subsidiary compared to $320,120, or 61.3% of sales, in the third quarter of 2004, of which $158,468 was for Corporate and $161,652 for our Infiniti Subsidiary. This $1,189,545 increase in SG&A expense dollars in the third quarter of 2005 compared to the third quarter of 2004 is primarily the result of expenses related to Corporate and our Combined Subsidiary, as compared to just Corporate and our Infiniti Subsidiary. For the nine months ended September 30, 2005, our SG&A expenses were $4,219,879 as compared to $1,611,317 for the comparable 2004 period. The $2,608,562 increase in SG&A expenses for the nine months ended September 30, 2005 compared to the same 2004 period was due primarily to expenses related to Corporate of $1,502,676, our Infiniti Subsidiary of $334,889, LaPolla Subsidiary of $451,496, and Combined Subsidiary of $1,930,818 compared to just Corporate of $1,039,247 and our Infiniti Subsidiary of $572,070. The SG&A as a percent of our sales was 31.9% for the nine months ended September 30, 2005 as compared to greater than 100% for the same 2004 period. The increase in SG&A expense dollars was a result of higher selling and marketing expenses in support of our sales growth, additional sales personnel, promotion and advertising costs, investor relations, and American Stock Exchange fees, sales travel, opening new sales offices, various insurance coverage premium increases connected to sales growth, opening warehouses in strategic locations nationally, stock compensation expenses to officers and directors, and relocating our corporate headquarters to Houston, Texas.

Professional fees consist of accounting, auditing, and legal fees. Our professional fees for the three months ended September 30, 2005 were $45,465, of which $29,877 was for Corporate and $15,588 was for our Combined Subsidiary as compared to $57,000, of which $56,539 was for Corporate and $461 was for our Infiniti Subsidiary for the comparable 2004 period. The decrease of $11,535 was primarily due to a decrease in attorney’s fees for past and current litigation related to Corporate. For the nine months ended September 30, 2005, our professional fees were $438,683, of which $355,968 was for Corporate, $75 was for our Infiniti Subsidiary, $19,117 was for our LaPolla Subsidiary, and $63,523 was for our Combined Subsidiary as compared to $322,521, of which $316,914 was for Corporate and $5,607 was for our Infiniti Subsidiary, in the comparable period in 2004. The $116,162 increase in professional fees in the first nine months of 2005 compared to the same 2004 period was primarily the result of an increase in attorney’s fees related to past and current Corporate litigation as well as auditing and accounting fees related to our acquisition of the LaPolla Subsidiary.

Our depreciation and amortization expense was $25,009 for the third quarter of 2005, of which $18,936 was for Corporate and $6,073 was for our Combined Subsidiary compared to $16,424 for the third quarter of 2004, of which $15,834 was for Corporate and $590 was for our Infiniti Subsidiary. The increase of $18,936 was primarily the result of purchasing property, plant and equipment for our manufacturing plants in Florida, Arizona and Texas and amortization of our intangible assets relating to the acquisition of our LaPolla Subsidiary. For the nine months ended September 30, 2005, our depreciation and amortization expense was $73,721, of which $52,586 was for Corporate, $1,878 was for our Infiniti Subsidiary, $585 was for our LaPolla Subsidiary, and $10,980 was for our Combined Subsidiary, while our depreciation and amortization expense was $58,092 for the comparable 2004 period, of which $56,442 was for Corporate and $1,650 was for our Infiniti Subsidiary. The $15,626 increase in depreciation and amortization expense in the first nine months of 2005 compared to the same 2004 period was primarily due to the acquisition of additional property, plant and equipment from our acquisition of the LaPolla Subsidiary, additional purchases of property, plant and equipment for our manufacturing and distribution facilities in Florida, Arizona and Texas, and amortization of our intangible assets in connection with our acquisition of the LaPolla Subsidiary.

We did not incur any research and development costs in the three or nine months ended September 30, 2005 or 2004.

Consulting fees for the three months ended September 30, 2005 were $51,203, of which $22,267 was for Corporate and $28,936 was for the Combined Subsidiary as compared to $51,144 for the three months ended September 30, 2004, of which $45,902 was for Corporate and $5,242 was for our Infiniti Subsidiary. For the nine months ended September 30, 2005, consulting fees were $176,595, of which $98,225 was for Corporate, $12,445 was for our Infiniti Subsidiary, $10,558 was for our LaPolla Subsidiary and $55,367 was for our Combined Subsidiary as compared to $122,137 for the nine months ended September 30, 2004, of which $116,125 was for Corporate and $6,012 was for our Infiniti Subsidiary. The $72,771increase for the nine months ended September 30, 2005 as compared to the same period in 2004 was the result of an increase in the number and type of consultants engaged to provide business and financial consulting services to us.

A-15

For the three months ended September 30, 2005, our interest expense was $113,901, of which $108,254 was for Corporate and $5,647 was for our Combined Subsidiary as compared to $111,290 for the three months ended September 30, 2004, of which $101,401 was for Corporate and $9,889 was for our Infiniti Subsidiary. Our interest expense for the nine months ended September 30, 2005 was $224,787, of which $210,553 was for Corporate, $3,569 was for our Infiniti Subsidiary, $4,485 was for our LaPolla Subsidiary, and $6,180 was for our Combined Subsidiary as compared to $250,693 for the nine months ended September 30, 2004, of which $202,036 was for Corporate and $48,657 was for our Infiniti Subsidiary. The decreases were primarily attributable to a decrease in the interest rate on loans payable - related party from 9% per annum for the 2004 year to 6% per annum for the 2005 year, partially offset by an increase from the note payable - other commencing on June 1, 2005. In addition, the principal balance on the loans payable - related party was $4,302,500 with accrued interest of $147,412 as of September 30, 2005, as compared to a principal balance of $4,885,000 with accrued interest of $184,898 as of September 30, 2004. Moreover, the principal balance on the note payable - other was $1,250,000 with accrued interest of $16,751 for the nine months ended September 30, 2005 as compared to $ -0- in 2004.

Other income in the three months ended September 30, 2005 was $5,269, all of which related to our Combined Subsidiary, as compared to other expense of $26,148 for the comparable 2004 period. Other income for the nine months ended September 30, 2005 was $22,511, all of which related to our Combined Subsidiary, as compared to other expense of $26,148 for the comparable period in 2004.

The income from discontinued operations for the three months ended September 30, 2005 was $349,117 compared to a loss of $1,764,031 for the three months ended September 30, 2004. The income of $349,117 resulted primarily from a gain related to the disposition of prior written off machinery and equipment during the third quarter of 2005, partially offset by a nominal rent expense, revised estimate related to our discontinued operations reserve for litigation and accrued workman’s compensation liability. Our income from discontinued operations for the nine months ended September 30, 2005 was $24,526 compared to a loss of $3,418,211 for the nine months ended September 30, 2004. The income of $24,526 resulted primarily from a gain related to the disposition of prior written off machinery and equipment during the third quarter of 2005, partially offset by a nominal rent expense, revised estimate related to our discontinued operations reserve for litigation and accrued workman’s compensation liability.

Financial Condition, Liquidity and Capital Resources

We assess our liquidity by our ability to generate cash to fund our operations. Significant factors in the management of liquidity are:  funds generated by operations, levels of accounts receivable, inventories, accounts payable and capital expenditures, funds required for acquisitions, adequate credit facilities, and financial flexibility to attract long term capital on satisfactory terms. Historically, we have generated insufficient cash from operations to meet our working capital requirements and have relied principally on related party funding from our Chairman over the past six years and outside investors to meet our working capital and other corporate needs. With the discontinuation of our RSM Products, the acquisition of the LaPolla Subsidiary, merger of the Infiniti Subsidiary with and into the LaPolla Subsidiary, merger of the LaPolla Subsidiary with and into the Company, in conjunction with our initial and continuing retention of additional sales and marketing personnel during the first three quarters of 2005, we are experiencing substantial improvement in our ability to generate enough cash from our operations to meet our working capital requirements. The net cash used in operating activities for the nine months ended September 30, 2005 was $2,782,066 compared to cash used of $4,588,351 for the nine months ended September 30, 2004. The decrease in net cash used in operating activities of $1,806,285 was primarily due to the discontinuation of our RSM Subsidiary, partially offset by an increase in cash required to fund growth in trade receivables, and a net increase in cash required to fund changes in other net operating assets and liabilities. We were required to expend certain funds during the first three quarters of 2005 to enhance our infrastructure to be able to effectively manage the growth surge we are continuing to experience in our sales, which included attracting and retaining new executives, integrating our LaPolla Subsidiary, creating sales, marketing and promotional materials, rolling out our LaPolla Products in national trade shows, implementing new software to centralize accounting processes, satisfying non-recurring liabilities related to our discontinued RSM Products business, adding more sales personnel to open up new markets for our Comprehensive Products in strategic locations, identifying and setting up a multitude of geographically situated public warehouses to support our national sales strategies, and relocating our corporate offices to Houston, Texas. The net cash for discontinued operations used in operating activities was $800,179 and provided by operating activities was $695,517, for the nine months ended September 30, 2005 and 2004, respectively.

Net cash used in investing activities in the first nine months of 2005 was $2,239,784 as compared to $176,305 in the comparable 2004 period. We invested $307,959 in property, plant and equipment during the nine months ended September 30, 2005 compared to $178,405 during the same period in 2004. Additionally, we invested $1,931,825, which is $2,000,000 net of $68,175 cash acquired, for the acquisition of our LaPolla Subsidiary, of which $1,384,707 was capitalized as goodwill and other intangible assets. The net cash provided by investing activities for discontinued operations was $-0- and $2,100 for the nine months ended September 30, 2005 and 2004, respectively.

Net cash provided by financing activities was $5,355,091 in the first nine months of 2005 compared to net cash provided by financing activities of $4,792,074 in the first nine months of 2004. During the first nine months of 2005, we repaid $182,082, $39,143, and $1,778, respectively, as compared to $9,600, $4,052, and $1,536, respectively, on our line of credit, long term debt, and capital lease obligation, respectively, in the first nine months of 2004. During the first nine months of 2005, we borrowed $25,594, $4,302,500, and $1,250,000, respectively, as compared to $12,043, $4,825,000, and $-0-, respectively, from our line of credit, loans payable - related party, and note payable - other, respectively, in the first nine months of 2004. We had proceeds from issuance of long term debt in the amount of $327,082 for the nine months ended September 30, 2005 compared to $-0- for the same period in 2004. The net cash used in financing activities for discontinued operations was $-0- and $29,781 for the nine months ended September 30, 2005 and 2004, respectively.

As of September 30, 2005, we had $357,706 of cash on hand as compared to $24,465 at December 31, 2004, representing a net increase in cash of $333,241 for the nine months ended September 30, 2005. During the nine months ended September 30, 2005, our working capital deficit decreased $2,004,985 from $7,706,197 at December 31, 2004 to $5,701,212 as of September 30, 2005. This decrease in the working capital deficit resulted from a decrease of $1,367,500 in loans payable - related party and a decrease in interest of $138,454 due to the Chairman from debt cancellation, a $2,831,726 increase in accounts payable, a $134,056 decrease in accrued expenses and other current liabilities and an increase of $143,498 in long-term debt, after taking into account a $2,895,686 increase in net trade receivables, an increase in inventories of $673,944, a $156,487 decrease in a line of credit, an increase of $63,531 in prepaid expenses and other current assets, and a decrease of $869,528 in liabilities from discontinued operations. We also had an increase in the reserve for litigation in the amount of $160,378.

We believe that the net cash provided by our operating activities, supplemented as necessary with borrowings available under our existing credit facilities, will provide us with sufficient resources to meet our working capital requirements during the remainder of this year and into the first quarter of 2006. Based on our sales growth trend, we will require additional funds to maintain and further improve our financial relationships with our main vendors and to fund growth in our trade receivables. The Chairman has loaned us $4,302,500 and is a co-borrower or has personally guaranteed $2,524,080 for added security on lines of credit, vendor accounts, and a note payable, which we are responsible to repay or otherwise settle. Based on the foregoing, the Company is anticipating raising monies during the fourth quarter of 2005 and first quarter of 2006, based on market conditions, through private placements of debt or equity, to obtain sufficient resources to meet its long term working capital requirements, debt service and other cash needs over the next twelve months or until we repay or settle the financial matters between us and the Chairman and become self sufficient with the cash received from our operating activities to operate our business without outside financial assistance. There can be no assurance that the Company will be able to obtain any funds, or if obtainable, on terms that are commercially feasible.

A-16

Forward Looking Statements

Statements made by us in this report and in other reports and statements released by us that are not historical facts constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express our opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of our control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements, whether made in this report or elsewhere, should be considered in context with the various disclosures made by us about our businesses including, without limitation, the risk factors discussed below. Although we believe our expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause our or our industry's actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause our financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: (a) financial position and results of operations, including SG&A expense targets and effects on income from continuing operations; (b) cash position and cash requirements, including the sufficiency of our cash requirements for the next twelve months; (c) sales and margins; (d) sources, amounts, and concentration of sales; (e) costs and expenses; (f) accounting estimates, including treatment of goodwill and intangible assets, doubtful accounts, inventory, restructuring, and warranty, and product returns; (g) operations, supply chain, quality control, and manufacturing supply, capacity, and facilities; (h) products and services, price of products, product lines, and product and sales channel mix; (i) relationship with customers, suppliers and strategic partners; (j) raw material variations, substrate preparation, application specifications, operator techniques, and ambient weather fluctuations; (k) acquisition and disposition activity; (l) credit facility and ability to raise capital; (m) real estate lease arrangements; (n) global economic, social, and geopolitical conditions; (o) industry trends and our response to these trends; (p) tax position and audits; (q) cost-reduction efforts, including workforce reductions, and the effect on employees; (r) sources of competition; (s) protection of intellectual property; (t) outcome and effect of current and potential future litigation; (u) research and development efforts; (v) future lease obligations and other commitments and liabilities; (w) common stock, including trading price; (x) security of computer systems; and (y) changes in accounting policies and practices. We do not plan to update any such forward-looking statements and expressly disclaim any duty to update the information contained in this report except as required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not issue or invest in financial instruments or their derivatives for trading or speculative purposes and are not subject to material foreign currency exchange risks at this time. Our outstanding debt and related interest expense, as it relates to interest rate exposure, in the United States is currently not material to our operations.

Item 4. Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Principal Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within LaPolla have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2005, the end of the quarterly period covered by this report. Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, as amended, our disclosure controls and procedures were not as effective as originally contemplated nor did such controls operate at a level appropriate to provide reasonable assurance for certain matters. A material weakness existed. The material weakness identified originated with the period immediately following the Company’s discontinuance of the operations of its RSM Subsidiary on November 5, 2004. The CFO that was originally responsible for the preparation of the financial statements and related notes for the quarter and year ended December 31, 2004 resigned on February 14, 2005 for title purposes and February 28, 2005 for employment purposes. A new CFO was retained on February 25, 2005. The new CFO reviewed and completed the worksheets relating to the evaluation of our disclosure controls and procedures. The CEO reviewed and approved the completed evaluation report. The Company also made an acquisition on February 11, 2005. All of the changes in this report, as amended, requiring reclassifications, restatements, as well as other changes, pertain to knowledge and experience concerning the application of certain accounting principles. The material weakness as identified highlights the need to train accounting and executive personnel regarding the application of appropriate accounting principles for SEC reporting and for succession. The actions that the Company has taken to correct this material weakness include but are not limited to: (a) training of the CEO concerning the tools that are used to prepare and review financial statements and related disclosures and the application of certain accounting principles; (b) enhancement of the hiring practices of the Company to seek where practicable CFOs that have prior SEC reporting experience as a prerequisite for that position; (c) a training program has been initiated for all accounting personnel at various levels to facilitate accurate and punctual reporting; (d) the hiring of our current CFO with prior SEC reporting experience; and (e) an increase in the number of accounting related personnel as deemed required. The Company believes the material weakness identified above has been corrected. There were no changes in our internal controls during the third quarter of 2005. There were significant changes in our internal controls or in other factors after the end of the third quarter of 2005 as described above. There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date of this amended report.

A-17

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The disclosures set forth under Part I, Item 3, “Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2004 and Part II, Item 1 in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005, as may be amended from time to time, are hereby incorporated in their entirety herein by this reference.

Various Lawsuits and Claims Arising in the Ordinary Course of Business

We are involved in various lawsuits and claims arising in the ordinary course of business, which are, in our opinion, immaterial both individually and in the aggregate with respect to our consolidated financial position, liquidity or results of operations.

Item 2. Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

During the quarterly period ended September 30, 2005, we issued restricted common stock for a certain private transaction, in reliance on Section 4(2) of the Act, as described below:

(a)   On July 12, 2005, we issued an aggregate of 8,000 shares of restricted common stock to our CEO, originally scheduled to vest in 4,000 share increments at the end of the third and fourth quarters of 2005 as other compensation, pursuant to his employment agreement, which were valued and recorded at $5,360.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

An Information Statement was provided to all of our stockholders to comply with the requirements of Section 14(c) of the Securities Exchange Act of 1934, as amended, and to provide information to all stockholders in connection with actions by written consent taken on July 12, 2005 by certain stockholders collectively owning 75.06% of our outstanding shares of common stock as of the record date of July 11, 2005. Such action constituted the approval and consent of stockholders representing a sufficient percentage of the total outstanding shares of common stock to approve the proposed Equity Incentive Plan. Accordingly, the actions were not submitted to our other stockholders for a vote. The written consent became effective on August 31, 2005.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Index of Exhibits on Page A-20.

A-18

SIGNATURES

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

			LAPOLLA INDUSTRIES, INC.
Date:	March __, 2006	By:
			Michael T. Adams
			CEO
			LAPOLLA INDUSTRIES, INC.
Date:	March __, 2006	By:
			John A. Campbell
			CFO and Treasurer

A-19

INDEX OF EXHIBITS

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.1/A	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2/A	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.
32/A	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.

A-20

Exhibit 31.1/A

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael T. Adams, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

Exhibit 31.2/A

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John A. Campbell, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of LaPolla Industries, Inc. (f/k/a IFT Corporation);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	March __, 2006	LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

Exhibit 32/A

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The following certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350 and in accordance with SEC Release No. 33-8238. These certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			Michael T. Adams
			Principal Executive Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Certification of Principal Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of LaPolla Industries, Inc. (f/k/a IFT Corporation), a Delaware corporation (the “Company”), hereby certifies, to his knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q/A of the Company for the period ended September 30, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	March __, 2006
		LAPOLLA INDUSTRIES, INC.
		(F/K/A IFT CORPORATION)
		By:
			John A. Campbell
			Principal Financial Officer

A signed original of this written statement required by Section 906 has been provided to LaPolla Industries, Inc. and will be retained by LaPolla Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.