**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  ̈
  Indicate
        by check mark whether the registrant is an accelerated filer (as defined
        in Rule
        12b-2 of the Exchange Act).  Yes  ̈  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 comments 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 comments 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 comments
          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 comments
          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 comments
          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 comments
          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
 *Index*
  **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
 *Index*
  **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
                
                $
                24,465Trade
                    Receivables, Net
                
                
                3,519,144
                
                
                691,926Inventories
                
                
                872,203
                
                
                267,995Prepaid
                    Expenses and Other Current Assets
                
                
                163,617
                
                
                41,053Current
                    Portion of Assets of Discontinued Operations
                
                
                7,151
                
                
                438Total
                    Current Assets
                
                
                4,669,640
                
                
                1,025,877Property,
                    Plant and Equipment, Net
                
                
                573,581
                
                
                287,784Other
                    Assets:Goodwill
                
                
                1,951,000
                
                
                774,000Other
                    Intangible Assets, Net
                
                
                200,014
                
                
                —Deposits
                    and Other Non-Current Assets
                
                
                76,029
                
                
                56,471Total
                    Other Assets
                
                
                2,227,043
                
                
                830,471Total
                    Assets
                
                $
                7,470,264
                
                $
                2,144,132**LIABILITIES
                    AND STOCKHOLDERS’ (DEFICIT)**Current
                    Liabilities:Accounts
                    Payable
                
                $
                3,724,856
                
                $
                1,126,847Accrued
                    Expenses and Other Current Liabilities
                
                
                544,391
                
                
                471,008Lines
                    of Credit
                
                
                100,057
                
                
                219,152Loans
                    Payable - Related Party
                
                
                4,279,408
                
                
                5,670,000Note
                    Payable - Other
                
                
                500,000
                
                
                —Current
                    Portion of Long-Term Debt
                
                
                48,136
                
                
                24,582Current
                    Portion of Liabilities from Discontinued Operations
                
                
                805,314
                
                
                1,220,485Total
                    Current Liabilities
                
                
                10,002,162
                
                
                8,732,074Other
                    Liabilities:Non
                    Current Portion of Long-Term Debt
                
                
                145,609
                
                
                14,243Non
                    Current Portion of Liabilities from Discontinued
                    Operations
                
                
                525,000
                
                
                525,000Reserve
                    for Litigation
                
                
                15,000
                
                
                15,000Total
                    Other Liabilities
                
                
                685,609
                
                
                554,243Total
                    Liabilities
                
                $
                10,687,771
                
                $
                9,286,317Stockholders’
                    (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) atJune
                    30, 2005 and December 31, 2004;$62,500aggregate
                    liquidation preference at June 30,
                    2005 and December 31, 2004
                
                
                55,035
                
                
                55,035Common
                    Stock, $.01 Par Value; 60,000,000 Shares Authorized; 50,564,986
                    and32,014,369
                    Issued and Outstanding at June 30, 2005 and December 31, 2004,Respectively
                
                
                505,650
                
                
                320,144Additional
                    Paid-In Capital
                
                
                59,784,797
                
                
                53,625,390Accumulated
                    (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
 *Index*
 
 **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
                
                $
                1,047,526Total
                    Sales
                
                
                5,206,176
                
                
                586,629
                
                
                7,663,829
                
                
                1,047,526Cost
                    of Sales:Coatings,
                    Sealants and Other Products
                
                
                4,183,298
                
                
                472,958
                
                
                6,388,291
                
                
                829,583Total
                    Cost of Sales
                
                
                4,183,298
                
                
                472,958
                
                
                6,388,291
                
                
                829,583Gross
                    Profit
                
                
                1,022,878
                
                
                113,671
                
                
                1,275,538
                
                
                217,943Operating
                    Expenses:Selling,
                    General and Administrative
                
                
                1,620,713
                
                
                753,427
                
                
                2,710,215
                
                
                1,291,197Professional
                    Fees
                
                
                126,723
                
                
                151,373
                
                
                393,218
                
                
                265,521Depreciation
                    and Amortization
                
                
                26,153
                
                
                21,298
                
                
                48,712
                
                
                41,668Consulting
                    Fees
                
                
                64,011
                
                
                60,780
                
                
                125,392
                
                
                70,993Interest
                    Expense
                
                
                10,702
                
                
                17,067
                
                
                28,542
                
                
                45,792Interest
                    Expense - Related Party
                
                
                43,694
                
                
                68,919
                
                
                82,344
                
                
                83,405Other
                    (Income) Expense
                
                
                (17,242
                )
                
                93
                
                
                (17,242
                )
                
                761Total
                    Operating Expenses
                
                
                1,874,753
                
                
                1,072,957
                
                
                3,371,181
                
                
                1,799,337Operating
                    (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
 *Index*
  **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
                  
                  
                  41,669Provision
                      for Losses on Trade Receivables
                  
                  
                  25,498
                  
                  
                  —Loss
                      on Disposition of Property, Plant and Equipment
                  
                  
                  (2,657
                  )
                  
                  760Stock
                      Based Operating Expenses:Other
                      Compensation
                  
                  
                  5,600
                  
                  
                  8,574Board
                      of Director Fees
                  
                  
                  339,290
                  
                  
                  251,820Changes
                      in Assets and Liabilities, Net of Effects from Purchase of
                      LaPolla
                      SubsidiaryTrade
                      Receivables
                  
                  
                  (1,340,505
                  )
                  
                  58,174Inventories
                  
                  
                  (292,637
                  )
                  
                  11,204Prepaid
                      Expenses and Other Current Assets
                  
                  
                  (12,364
                  )
                  
                  (173,072
                  )Deposits
                      and Other Non Current Assets
                  
                  
                  (136,835
                  )
                  
                  12,420Accounts
                      Payable
                  
                  
                  1,429,855
                  
                  
                  (196,985
                  )Accrued
                      Expenses and Other Current Liabilities
                  
                  
                  240,815
                  
                  
                  121,537Other
                      Liabilities
                  
                  
                  184,420
                  
                  
                  —Reserve
                      for Litigation
                  
                  
                  —
                  
                  
                  15,000Net
                      Operating Activities of Discontinued Operations
                  
                  
                  (410,931
                  )
                  
                  (700,252
                  )Net
                      Cash (Used in) Operating Activities
                  
                  
                  (2,325,563
                  )
                  
                  (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
                  
                  
                  7,789Payments
                      on Line of Credit
                  
                  
                  (122,063
                  )
                  
                  (6,600
                  )Proceeds
                      from Loans Payable - Related Party
                  
                  
                  4,302,500
                  
                  
                  3,950,000Proceeds
                      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*
                  
                  $
                  83,060
                  
                  $
                  50,719*Cash
                      at Beginning of Period*
                  
                  
                  24,465
                  
                  
                  35,385*Cash
                      at End of Period*
                  
                  $
                  107,525
                  
                  $
                  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
                  
                  $
                  —
                  
                  $
                  7,200Property,
                      Plant and Equipment acquired via issuance of Long Term
                      Debt
                  
                  
                  184,420
                  
                  
                  —Common
                      Stock issued as Other Compensation pursuant to Employment
                      Agreements
                  
                  
                  5,600
                  
                  
                  8,574Common
                      Stock issued as Director Fees pursuant to Director Compensation
                      Plan
                  
                  
                  339,290
                  
                  
                  251,820Common
                      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
                  
                  
                  —
                  
                  
                  674,315Common
                      Stock issued upon Cancellation of Indebtedness
                  
                  $
                  6,000,000
                  
                  $
                  —
  See
        accompanying notes to condensed consolidated financial statements.
 A-7
 *Index*
  **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
                
                $
                704,747Less:
                    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
                
                $
                65,920Finished
                    Goods
                
                
                392,491
                
                
                202,074Total
                
                $
                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
                
                $
                137,822Leasehold
                    Improvements
                
                
                9,926
                
                
                62,278Office
                    Furniture and Equipment
                
                
                93,714
                
                
                70,195Computers
                    and Software
                
                
                207,335
                
                
                192,284Displays
                
                
                62,278
                
                
                —Machinery
                    and Equipment
                
                
                319,954
                
                
                133,273Total
                    Property, Plant and Equipment
                
                $
                939,497
                
                $
                595,852Less:
                    Accumulated Depreciation
                
                
                (365,916
                )
                
                (308,068
                )Total
                    Property, Plant and Equipment, Net
                
                $
                573,581
                
                $
                287,784
 A-8
 *Index*
  **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
                
                $
                —
                
                $
                774,000LaPolla
                    Subsidiary
                
                
                1,951,000
                *
                
                —$
                1,951,000
                
                $
                774,000
  * ***See
          also*** Note 13
          - Merger of Subsidiary.
 
 *Other
          Intangible Assets*
 
 **June
                    30, 2005**Gross
                    Amount
                
                Accumulated
                    Amortization
                
                Amortization
                    PeriodCustomer
                    List
                
                $
                69,235
                
                $
                (4,616
                )
                
                5
                    YearsProduct
                    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****Amount**
                
                **Per
                    Share Amount**
                
                **Amount**
                
                **Per
                    Share Amount**
                
                **Amount**
                
                **Per
                    Share Amount**
                
                **Amount**
                
                **Per
                    Share 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
 *Index*
  **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
                
                $
                438Prepaid
                    Expenses and Other Current Assets
                
                
                2,500
                
                
                —Total
                    Assets
                
                $
                7,151
                
                $
                438*Liabilities*Accounts
                    Payable
                
                $
                255,396
                
                $
                662,696Accrued
                    Expenses and Other Current Liabilities
                
                
                50,000
                
                
                57,871Line
                    of Credit
                
                
                499,918
                
                
                499,918Reserve
                    for Litigation
                
                
                525,000
                
                
                525,000Total
                    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
                
                $
                7,663,829Gross
                    Profit
                
                $
                ---
                
                $
                1,275,538
                
                $
                1,275,538Operating
                    (Loss)
                
                $
                (1,529,419
                )
                $
                (566,224
                )
                $
                (2,095,643
                )Capital
                    Expenditures (Net of Capital Leases)
                
                $
                12,021
                
                $
                256,242
                
                $
                268,263Depreciation
                    and Amortization Expense
                
                $
                25,957
                
                $
                22,755
                
                $
                48,712Identifiable
                    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
          also*** ** Note
          12 - *Discontinued
          Operations* .
 
 **Note
          15. Commitments and Contingencies.**
 
 **Reserve**
 
 **June
                    30, 2005**
                
                **December
                    31, 2004**Accounts
                    Payable - Discontinued Operations
                
                $
                255,396
                
                $
                662,696Accrued
                    Expenses and Other Current Liabilities - Discontinued
                    Operations
                
                
                50,000
                
                
                57,871Line
                    of Credit - Discontinued Operations
                
                
                499,918
                
                
                499,918Reserve
                    for Litigation - Discontinued Operations
                
                
                525,000
                
                
                525,000Reserve
                    for Litigation - Current Operations
                
                
                15,000
                
                
                15,000Total
                
                $
                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
 *Index*
  **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
                
                
                52,390As
                    Adjusted
                
                $
                (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 Adjusted Per (C))
                
                $
                (865,794
                )
                $
                (2,458,126
                )Adjustments
                
                
                (3,217
                )
                
                20,111As
                    Adjusted
                
                $
                (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 Adjusted Per (D))
                
                $
                (869,065
                )
                $
                (2,438,015
                )Adjustments
                
                
                (5,769
                )
                
                (7,692
                )As
                    Adjusted
                
                $
                (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 Adjusted Per (E))
                
                $
                (874,834
                )
                $
                (2,445,707
                )Adjustments
                
                
                25,473
                
                
                25,473As
                    Adjusted and Restated
                
                $
                (849,361
                )
                $
                (2,420,234
                )
 
 ***See
          also*** Page A-2
          - Items Amended Hereby, paragraph (F) for more information.
  A-11
 *Index*
  **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
                
                $
                1,047,526Total
                    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
 *Index*
  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
 *Index*
 
 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 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. 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
 *Index*
 
 **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)
              V*arious
                  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
              
              374,2672.
                  Lt. General Arthur J. Gregg, US Army (Retired)
              
              44,689,413
              
              374,5183.
                  Michael T. Adams
              
              44,689,328
              
              374,6034.
                  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
 *Index*
 
 **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
                  27, 2006
                
                By:
                /s/
                    Michael T. Adams, CEOMichael
                    T. AdamsCEO**LAPOLLA
                    INDUSTRIES, INC.****(F/K/A
                    IFT CORPORATION)**Date:March
                  27, 2006
                
                By:
                /s/
                    John A. Campbell, CFOJohn
                    A. CampbellCFO
                    and Treasurer
  A-16
 *Index*
  **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