10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For The Quarterly Period Ended March 31, 2006

Commission File No. 001-31354

LaPolla Industries, Inc.

(Exact name of Registrant as Specified in its Charter)

Delaware	13-3545304
(State of Incorporation)	(I.R.S. Employer Identification No.)

Intercontinental Business Park
15402 Vantage Parkway East, Suite 322
Houston, Texas	77032
(Address of Principal Executive Offices)	(Zip Code)

(281) 219-4700

(Registrant’s Telephone Number)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

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

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

As of April 12, 2006 there were 53,210,251 shares of Common Stock, par value $.01, outstanding.

LAPOLLA INDUSTRIES, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2006

INDEX

			Page
PART I		FINANCIAL INFORMATION
	Item 1	Financial Statements	3
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	12
	Item 4	Controls and Procedures	12
PART II		OTHER INFORMATION
	Item 1	Legal Proceedings	12
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	12
	Item 3	Defaults Upon Senior Securities	12
	Item 4	Submission of Matters to a Vote of Security Holders	12
	Item 5	Other Information	12
	Item 6	Exhibits	12
SIGNATURES			13
INDEX OF EXHIBITS			14

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

LAPOLLA INDUSTRIES, INC.

INDEX TO FINANCIAL STATEMENTS AND

FINANCIAL STATEMENT SCHEDULES

CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31, 2006 (Unaudited) and December 31, 2005	4
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Three Months Ended March 31, 2006 and 2005	5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Three Months Ended March 31, 2006 and 2005	6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)		7

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.

3

LAPOLLA INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2006			2005
	(Unaudited)
ASSETS
Current Assets:
Cash	$	198,283		$	400,621
Trade Receivables, Net		4,103,700			4,209,931
Inventories		2,197,067			1,393,603
Prepaid Expenses and Other Current Assets		418,400			295,557
Deferred Income Taxes, Net		1,273,532			1,140,172
Total Current Assets		8,190,982			7,439,884
Property, Plant and Equipment, Net		998,972			907,574
Other Assets:
Goodwill		1,951,000			1,951,000
Other Intangible Assets, Net		182,706			188,476
Deposits and Other Non-Current Assets		302,382			148,107
Total Other Assets		2,436,088			2,287,583
Total Assets	$	11,626,042		$	10,635,041
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	4,731,221		$	4,074,946
Accrued Expenses and Other Current Liabilities		597,692			1,019,071
Line of Credit		—			21,816
Loans Payable - Related Party		220,000			3,000,000
Current Portion of Note Payable - Other		625,000			1,693,211
Current Portion of Long-Term Debt		110,837			78,543
Current Portion of Liabilities from Discontinued Operations		499,918			699,345
Total Current Liabilities		6,784,668			10,586,932
Other Liabilities
Note Payable - Related Party		3,000,000			—
Non Current Portion of Note Payable - Other		1,618,212			—
Non Current Portion of Long-Term Debt		158,679			218,417
Non Current Portion of Liabilities from Discontinued Operations		45,000			140,641
Reserve for Litigation		13,500			175,378
Total Other Liabilities		4,835,391			534,436
Total Liabilities		11,620,059			11,121,368
Stockholders’ Equity:
Preferred Stock, $1.00 Par Value; 2,000,000 Shares Authorized, of which Designations:
Series A Convertible, 750,000 Shares Authorized; 62,500 Issued and Outstanding (Less Offering Costs of $7,465) at March 31, 2006 and December 31, 2005; $62,500 aggregate liquidation preference at March 31, 2006 and December 31, 2005		55,035			55,035
Common Stock, $.01 Par Value; 65,000,000 Shares Authorized; 53,210,251 Issued and Outstanding at March 31, 2006 and December 31, 2005, respectively		532,103			532,103
Additional Paid-In Capital		61,759,416			61,594,114
Accumulated Deficit		(62,340,571	)		(62,667,579	)
Total Stockholders’ Equity		5,983			(486,327	)
Total Liabilities and Stockholders’ Equity	$	11,626,042		$	10,635,041

See accompanying notes to condensed consolidated financial statements.

4

LAPOLLA INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,
	2006			2005
Sales	$	6,042,115		$	2,457,653
Cost of Sales		4,791,817			2,204,993
Gross Profit		1,250,297			252,660
Operating Expenses:
Selling, General and Administrative		1,159,473			1,089,502
Professional Fees		69,478			266,495
Depreciation and Amortization		41,221			22,559
Consulting Fees		21,002			61,382
Interest Expense		15,173			17,840
Interest Expense - Related Party		45,370			38,650
Total Operating Expenses		1,351,718			1,496,428
Operating (Loss) Before Income Taxes		(101,420	)		(1,243,768	)
Income Tax Benefit-Deferred		133,360			—
Operating Income (Loss)		31,940			(1,243,768	)
Income (Loss) From Discontinued Operations, Net of Income Tax Benefit-Deferred		295,069			(327,105	)
Net Income (Loss)	$	327,008		$	(1,570,873	)
Net Income (Loss) Per Share - Basic
Continuing Operations	$	0.001		$	(0.025	)
Discontinued Operations		0.005			(0.006	)
Total	$	0.006		$	(0.031	)
Weighted Average Shares Outstanding		53,210,251			49,792,164
Net Income (Loss) Per Share - Diluted:
Continuing Operations	$	0.001		$	(0.025	)
Discontinued Operations		0.005			(0.006	)
Total	$	0.006		$	(0.031	)
Weighted Average Shares Outstanding		54,193,001			50,570,002

See accompanying notes to condensed consolidated financial statements

5

LAPOLLA INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2006			2005
Cash Flows From Operating Activities
Net Income (Loss)
Continuing Operations	$	31,940		$	(1,243,769	)
Discontinued Operations		295,069			(327,105	)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) by Operating Activities:
Depreciation and Amortization		64,987			28,358
Provision for Losses on Trade Receivables		36,257			—
Deferred Income Taxes		(133,360	)		—
Share Based Compensation Expense		165,302			2,000
Changes in Assets and Liabilities, Net of Effects of Purchase of Business Entity:
Trade Receivables		69,973			(434,206	)
Inventories		(803,464	)		(49,163	)
Prepaid Expenses and Other Current Assets		(122,844	)		(81,832	)
Deposits and Other Non Current Assets		(154,276	)		5,168
Accounts Payable		656,277			718,366
Accrued Expenses and Other Current Liabilities		(419,436	)		124,757
Other Liabilities		(162,290	)		—
Net Operating Activities of Discontinued Operations		—			215,040
Net Cash Provided by (Used in) Operating Activities		(770,933	)		(1,042,386)	)
Cash Flows From Investing Activities
Additions to Property, Plant and Equipment	$	(150,615	)	$	(45,610	)
Payment for Purchase of Business Entity, Net of Cash Acquired		—			(1,931,825	)
Net Cash Provided by (Used in) Investing Activities		(150,615	)		(1,977,435	)
Cash Flows From Financing Activities
Proceeds from the Issuance of Stock	$	—		$	—
Proceeds from Line of Credit		(21,816	)		1,039
Payments on Line of Credit		—			(61,973	)
Proceeds from Loans Payable - Related Party		220,000			—
Proceeds from Note Payable - Other		550,000			(9,079	)
Proceeds from Note Payable - Related Party		—			3,187,500
Principal Repayments on Long Term Debt		(28,975	)		(9,663	)
Net Cash Provided by (Used in) Financing Activities		719,209			3,116,903
Net Increase In Cash	$	(202,339	)	$	97,082
Cash at Beginning of Period		400,621			24,465
Cash at End of Period	$	198,283		$	121,547
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Income Taxes	$	—		$	—
Cash Payments for Interest	$	30,610		$	17,841
Supplemental Schedule of Non Cash Investing and Financing Activities
Common Stock issued as Other Compensation pursuant to Employment Agreements	$	—		$	2,000
Common Stock issued in connection with Purchase of Business Entity		—			22
Common Stock issued upon Cancellation of Indebtedness	$	—		$	6,000,000

See accompanying notes to condensed consolidated financial statements.

6

LAPOLLA INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Basis of Presentation.

The condensed financial statements included herein are unaudited. In the opinion of management, these statements include all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position of LaPolla Industries, Inc. (the “Company” or “LaPolla”) as of March 31, 2006, and the results of operations and cash flows for the three months ended March 31, 2006 and 2005. These condensed financial statements should be read in conjunction with the financial statements and notes included in LaPolla’s Annual Report on Form 10-K, as may be amended from time to time, for the year ended December 31, 2005. The results of operations for the three months ended March 31, 2006 are not necessarily indicative of the results to be expected for the full year. Certain amounts in the prior years have been reclassified to conform to the 2006 unaudited condensed consolidated financial statement presentation.

Note 2. Dependence on Few Suppliers.

The Company is dependent on a few suppliers for certain of its raw materials and finished goods. For the quarters ended March 31, 2006 and 2005, raw materials and finished goods purchased from the Company’s three largest suppliers accounted for approximately 55 % and 73 % of purchases, respectively.

Note 3. Trade Receivables.

The following is a summary of trade receivables at:

	March 31, 2006			December 31, 2005
Trade Receivables	$	4,206,549		$	4,276,522
Less: Allowance for Doubtful Accounts		(102,849	)		(66,591	)
Trade Receivables, Net	$	4,103,700		$	4,209,931

Note 4. Inventories.

The following is a summary of inventories at:

	March 31, 2006		December 31, 2005
Raw Materials	$	938,309	$	591,398
Finished Goods		1,258,758		802,205
Total	$	2,197,067	$	1,393,603

Note 5.Deferred Income Taxes.

The following is a summary of deferred income taxes at:

Deferred Tax Assets:	March 31, 2006			December 31, 2005
Net Operating Loss Carry-Forwards	$	29,334,012		$	29,232,642
Temporary Differences:
Nondeductible Accruals		(555,350	)		(390,048	)
Net Operating Loss Carry-Forward after Temporary Differences		28,778,662			28,842,594
Statutory Tax Rate		34	%		34	%
Total Deferred Tax Assets		9,784,745			9,806,482
Valuation Allowance for Deferred Tax Assets		(8,511,213	)		(8,666,310	)
Net Deferred Taxes	$	1,273,532		$	1,140,172

See also Note 6 for a summary of deferred income taxes for discontinued operations.

Note 6. Discontinued Operations.

The consolidated financial statements and the related notes reflect the financial position, results of operations and cash flows on an aggregated basis for the Company’s discontinued operations for the periods presented. The following is a summary of the liabilities of discontinued operations at:

Liabilities	March 31, 2006		December 31, 2005
Accounts Payable	$	—	$	199,427
Line of Credit		499,918		499,918
Reserve for Litigation		45,000		140,641
Total Liabilities	$	544,918	$	839,986

Significant components of the Company's discontinued operations deferred tax assets and liabilities are as follows at:

Deferred Tax Assets:	March 31, 2006			December 31, 2005
Net Operating Loss Carry-Forwards (No Temporary Differences)	$	33,522,405		$	33,949,445
Statutory Tax Rate		34	%		34	%
Total Deferred Tax Assets before Utilization		11,397,618			11,542,811
Income Tax (Benefit) Utilized		(44,870	)		—
Income Taxes Currently Payable (Refundable)		100,323			44,870
Total Income Tax (Benefit) to be Utilized		(100,323	)		(44,870	)
Total Deferred Tax Assets after Utilization		11,252,424			11,497,941
Valuation Allowance for Deferred Tax Assets		(11,252,424	)		(11,497,941	)
Net Deferred Taxes	$	—		$	—

Future tax benefit for net operating loss carry-forwards are subject to limitations based on discontinued operating subsidiaries’ abilities to generate future taxable income.

7

LAPOLLA INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED- CONTINUED)

Note 7. Property, Plant and Equipment.

The following is a summary of property, plant and equipment at:

	March 31, 2006			December 31, 2005
Vehicles	$	379,676		$	379,676
Leasehold Improvements		14,191			14,191
Office Furniture and Equipment		99,137			164,258
Computers and Software		397,591			312,999
Machinery and Equipment		550,257			367,478
Displays		65,121			—
Plant Construction in Progress		—			116,756
Total Property, Plant and Equipment	$	1,505,973		$	1,355,358
Less: Accumulated Depreciation		(507,002	)		(447,784	)
Total Property, Plant and Equipment, Net	$	998,972		$	907,574

Note 8. Goodwill and Other Intangible Assets.

The following is a summary of goodwill at:

	March 31, 2006		December 31, 2005
Coatings	$	1,049,458	$	1,049,458
Foam		640,577		640,577
Paints		123,092		123,092
Sealants		125,507		125,507
Adhesives		172		172
Equipment		12,194		12,194
Totals	$	1,951,000	$	1,951,000

The following is a summary of other intangible assets at:

	March 31, 2006			December 31, 2005
Customer List	$	69,235		$	69,235
Product Formulation		138,471			138,471
Total Other Intangible Assets	$	207,706		$	207,706
Less: Accumulated Amortization		(25,000	)		(19,230	)
Total Other Intangible Assets, Net	$	182,706		$	188,476

Note 9. Loans Payable - Related Party.

On March 20, 2006, the Company received a written commitment from the Chairman of the Board to provide $1,500,000 for working capital to facilitate growth and expansion of the Company. The funding will take the form of a demand loan bearing six percent (6%) interest per annum. The Chairman loaned the Company funds aggregating $220,000 under this commitment as of March 31, 2006. See also Note 11 - Note Payable - Related Party.

Note 10. Note Payable - Other.

On June 2, 2005, the Company and the Chairman signed a Promissory Note with a national institution granting the Company access to funds in the amount of $2,000,000, which may be drawn against from time to time for the operations of the Company (“Note”). 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”). On March 24, 2006, the parties amended the Note to increase the amount of funds available by $500,000 thereby granting the Company access to $2,500,000, and extend the maturity date to January 1, 2008 (“Amended Note”). The Company used $2,243,211 of the funds available under the Amended Note at March 31, 2006. Notwithstanding the new maturity date, the Company is required to repay the Amended Note in monthly installments of $208,333 beginning on January 1, 2007.

Note 11. Note Payable - Related Party.

On February 8, 2006, the Company executed a Promissory Note in favor of the Chairman of the Board for $3,000,000, which bears interest at six percent 6% per annum, with principal to be paid on December 31, 2007 (“Related Party Note”); provided, however, that if the Company subsequent to the date hereof but prior to December 31, 2007 raises private debt or equity financing yielding gross proceeds of not less than $7,000,000, then the unpaid principal balance will become due and payable. Prior to establishment of the Related Party Note, the Company owed the Chairman $3,000,000 which was advanced during 2005 for working capital and previously classified as Loans Payable - Related Party. The Related Party Note memorialized the cancellation of the demand nature of the $3,000,000 indebtedness owed by the Company to the Chairman and established a repayment date and condition of prepayment in the event the Company achieves a financing.

8

LAPOLLA INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED- CONTINUED)

Note 12. Business Segment Information.

The Company is a national manufacturer and distributor with seven segments: Coatings, Foam, Paints, Sealants, Adhesives, Equipment, and All Other. The Company established these segments in the fourth quarter of 2005 due to a change in the structure of its internal organization which caused the composition of its prior reportable segments based on subsidiaries to change. The first quarter of 2005 has been restated to reflect the change. The Company’s segments are organized based on differences in products. The Company primarily manufactures coatings and distributes foam, paints, sealants, adhesives, equipment, and all other products. Production facilities are located in Texas, Florida and Arizona. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company allocates resources to segments and evaluates the performance of segments based upon reported segment income before income taxes. A substantial amount of administrative expenses are allocated to the segments. The portion not allocated to the segments represents the unallocated cost of certain corporate expenses, insurance, investor relations, and gains and losses related to the disposal of corporate assets and are included in Unallocated Amounts. There are no intersegment sales or transfers.

Segments
March 31, 2006
	Coatings		Foam		Paints		Sealants		Adhesives			Equipment		All Other		Totals
Sales	$	2,083,735	$	3,187,694	$	324,662	$	228,554	$	4,032		$	176,049	$	37,389	$	6,042,115
Depreciation and Amortization		32,977		6,639		676		476		8			367		78		41,221
Interest Expense		17,750		27,154		2,766		1,947		34			1,500		318		51,469
Segment Profit (Loss)		294,115		125,887		43,972		37,390		(520	)		30,945		3,756		535,545
Segment Assets(1)		3,734,199		4,747,689		541,395		419,982		5,367			239,020		48,174		9,735,826
Expenditures for Segment Assets	$	96,875	$	44,629	$	4,545	$	10,722	$	57		$	2,465	$	523	$	159,816

March 31, 2005
	Coatings			Foam			Paints			Sealants			Adhesives		Equipment		All Other			Totals
Sales	$	909,985		$	1,130,759		$	172,001		$	156,379		$	—	$	24,186	$	64,344		$	2,457,653
Depreciation and Amortization		18,047			3,296			501			456			—		71		188			22,559
Interest Expense		18,055			22,435			3,413			3,103			—		480		1,277			48,761
Segment Profit (Loss)		(96,798	)		(283,857	)		(14,421	)		(27,316	)		—		1,070		(8,796	)		(430,117	)
Segment Assets(1)		2,487,386			2,427,364			394,883			372,611			172		50,411		101,674			5,834,501
Expenditures for Segment Assets	$	28,375		$	11,008		$	1,675		$	3,691		$	—	$	235	$	626		$	45,610

The following are reconciliations of reportable segment profit or loss, and assets, to the Company’s consolidated totals for the years indicated:

Profit or Loss
	March 31, 2006			March 31, 2005
Total Profit or Loss for Reportable Segments	$	535,545		$	(430,117	)
Unallocated Amounts:
Corporate Expenses		636,966			(813,651	)
Income (Loss) Before Income Taxes	$	(101,420	)	$	(1,243,768	)

Assets
	March 31, 2006		March 31, 2005
Total Assets for Reportable Segments(1)	$	9,735,826	$	5,834,501
Other Unallocated Amounts(2)		1,890,215		250,132
Consolidated Total	$	11,626,042	$	6,084,633

____________________

⁽¹⁾ Segment assets are the total assets used in the operation of each segment.

⁽²⁾ Includes corporate assets which are principally cash and cash equivalents and deferred tax assets.

9

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

Performance in First Quarter of 2006 compared to First Quarter of 2005

Overview

This financial review presents our operating results for the three months ended March 31, 2006 and 2005, and our financial condition at March 31, 2006. Except for the historical information contained herein, the following discussion contains forward-looking statements that are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors under the caption “Forward Looking Statements” in this section of this report. In addition, the following review should be read in connection with the information presented in our consolidated financial statements and the related notes for the year ended December 31, 2005.

Overall Results of Operations

The following is a summary of sales for the three months ended:

	March 31, 2006		March 31, 2005
Sales	$	6,042,115	$	2,457,653

Our sales increased $3,584,462, or 145%, for the first quarter of 2006 compared to the first quarter of 2005, due to an increase in the number of sales personnel, independent representatives, and distributors selling our various products across all of our segments.

Our gross profit increased $997,637, or 394%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, due to higher selling prices and sales volume growth in our coatings, foam, paints, sealants, adhesives, and equipment segments, offset by a slight decrease in the all other segment. The gross margin increased for the first quarter of 2006 compared to the first quarter of 2005, due to economies of scale from increased purchasing power for the raw materials related to our manufactured and finished goods and improved manufacturing efficiencies.

Our total costs and expenses are comprised of cost of sales, selling, general and administrative expenses, or SG&A, professional fees, depreciation and amortization, consulting fees, and interest expense. These total costs and expenses increased $2,442,113, or 65%, for the first quarter of 2006 compared to the first quarter of 2005, due to an increase of $2,586,824 for cost of sales, $69,971 for SG&A, $18,662 for depreciation and amortization, and $4,053 for interest expense, offset by a decrease of $197,017 for professional fees and $40,380 for consulting fees.

Cost of sales increased $2,586,824, or 117%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, due to an increase in purchases of raw materials for manufactured goods and finished goods, to support our rapid sales growth.

SG&A increased $69,971, or 6%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005, due to an increase of $174,544 for payroll and related employee benefits, $20,406 for sales commissions, $2,055 for insurances, $81,307 for marketing, promotions and trade shows, $13,477 for recruiting fees, $750 for director fees, $36,257 for bad debts, and $11,364 for investor relations, offset by a decrease of $31,931 for travel and related services, $8,769 for advertising, $33,750 for American Stock Exchange Fees, $1,273 for rents, and $194,466 for corporate office expenses.

Professional fees decreased $197,017, or 74%, for the first quarter of 2006 compared to the first quarter of 2005, due to a decrease of $14,531 for outside accountants, auditing and auditing related services and $182,486 for legal fees.

Depreciation and amortization expense increased $18,662, or 83%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, due to an increase of $14,816 for depreciable property, plant and equipment and $3,846 for amortization of other intangible assets.

Consulting fees decreased $40,380, or 66%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005, due to a decrease in outside professional services for investor relations, computer software, and insurance.

Interest expense increased $4,053, or 7%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, due to an increase $6,720 in accrued interest related to the loans payable- and note payable-related party during the first quarter of 2005 which bear interest at 6% per annum, offset by a decrease $2,667 in interest from various other notes payable.

We had income of $295,069 from discontinued operations for the first quarter of 2006 as a result of gains from writes offs of aged accounts payables and a reduction in the reserve for litigation, compared to a loss of $327,105 for the first quarter of 2005.

Net income and earnings per share - assuming dilution for the first quarter of 2006 were $327,008 and $.006, respectively, compared to a $1,570,873 net loss and $.031 net loss per share, for the first quarter of 2005. The net income was due to increases in sales forces, selling prices, economies of scale from increased purchasing power for the raw materials related to our manufactured and finished goods, and improved manufacturing efficiencies.

Results of Business Segments

The following is a summary of sales by segment for the three months ended:

Segments	March 31, 2006		March 31, 2005
Coatings	$	2,083,735	$	909,985
Foam		3,187,694		1,130,759
Paints		324,662		172,001
Sealants		228,554		156,379
Adhesives		4,032		—
Equipment		176,049		24,186
All Other	$	37,389	$	64,344

10

Coatings sales increased $1,173,750, or 129%, for the first quarter of 2006 compared to the first quarter of 2005, due to an increase in our sales forces, advertising, marketing and promotion programs, and higher selling prices. Segment profit increased $393,666, or 238%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005. Other factors increasing the coatings segment profit for the quarter ended March 31, 2006 were increased sales volumes, manufacturing efficiencies, and increased purchasing power for raw materials for manufactured goods and finished goods.

Foam sales increased $2,056,935, or 182%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005, due to the same reasons enumerated in our coatings segment above. Segment profit increased $464,664, or 2,003%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005. Other factors increasing the foam segment profit for the first quarter of 2006 were increased sales volumes and increased purchasing power for finished goods.

Paints sales increased $152,661, or 89%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, as a result of an increase in our sales force and limited regional advertising, marketing and promotional program initiated in 2005. Segment profit increased $48,553, or 150%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005. Other factors increasing the paints segment profit for the three months ended March 31, 2006 were increased sales volumes and purchasing power for finished goods.

Sealants sales increased $72,175, or 46%, for the first quarter of 2006 compared to the first quarter of 2005, due to the same reasons enumerate in our paints segment. Segment profit increased 48,194, or 318%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005. Other factors increasing the sealants segment profit for the quarter ended March 31, 2006 were increased sales volumes and purchasing power for finished goods.

Adhesives sales were $4,032 for the quarter ended March 31, 2006. We did not have any adhesive segment sales for the first quarter of 2005. Segment loss was $62 for the first quarter of 2006.

Equipment sales increased $151,864, or 628%, for the three months ended March 31, 2006 compared to the three months ended March 31, 2005, due to the same reasons enumerated in our coatings and foam segments. Segment profit increased $43,298, or 567%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005. Other factors increasing the equipment segment profit for the three months ended March 31, 2006 were increased sales volumes described above.

All Other sales decreased $26,954, or 42%, for the first quarter of 2006 compared to the first quarter of 2005, due to a decrease in walk-in customers in our Florida and Arizona locations needing sundry items. Segment profit decreased $676, or 8%, for the quarter ended March 31, 2006 compared to the quarter ended March 31, 2005.

Liquidity and Capital Resources

Net cash used in our operations was $770,933 for the first quarter of 2006 compared to $1,042,386 for the first quarter of 2005. The cash used in operations for the three months ended March 31, 2006 was attributable to our net income for the period, including the effect of adjustments to reconcile net income to cash provided by or used in operating activities and adjusting for non-cash items, offset by increases in inventories, prepaid expenses and other current assets, deposits and other non current assets and accounts payable, and decreases in trade receivables, accrued expenses and other current liabilities, and other liabilities. For the first quarters ended March 31, 2006 and 2005, net cash provided by discontinued operations was $-0- and $215,040, respectively. Cash from operations and funds available from the $1.5 Million commitment from the Chairman of the Board, are expected to continue to be sufficient to meet our operating requirements and to fund our capital spending. Notwithstanding the foregoing, we may seek to raise additional funds through private placements of common stock to accredited sophisticated investors to fund our trade receivables growth during 2006, an acquisition as part of our strategy for accelerating growth, or to pay down our short and long term debts, depending on market conditions.

Net cash used in investing activities was $150,615 for the three months ended March 31, 2006 compared to $45,610 for the three months ended march 31, 2005. We invested $84,593 in computers and software and $66,022 in property, plant and equipment during the first quarter of 2006.

Net cash provided by financing activities was $719,209 for the quarter ended March 31, 2006 compared to $3,116,903 for the quarter ended March 31, 2005. We accessed $550,000 from our note payable - other, $220,000 from our commitment from the Chairman of the Board, while we paid off our line of credit and made principal repayments on our long term debt during the first quarter of 2006.

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. In evaluating these statements, some of the factors that you should consider include the following: Financial position and results of operations, including general and administrative expense targets and effects on income from continuing operations; cash position and cash requirements, including the sufficiency of our cash requirements for the next twelve months; accounting estimates, including treatment of goodwill and intangible assets, doubtful accounts, inventory, warranty, and product returns; operations, supply chain, quality control, and manufacturing supply, capacity, and facilities; products and services, price of products, product lines, and product and sales channel mix; relationship with customers, suppliers and strategic partners; application specifications; credit facilities; real estate lease arrangements; industry trends and our response to these trends; sources of competition; outcome and effect of current and potential future litigation; common stock, including trading price; security of computer systems; and changes in accounting policies and practices, as may be adopted by regulatory agencies, and the Financial Accounting Standards Board. Consequently, while the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. 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. 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.

11

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 SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Our management, including our Principal Executive Officer and our Principal Financial Officer, does not expect that our disclosure controls or procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. We carried out an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2006, the end of the quarterly period covered by this report. The evaluation of our disclosure controls and procedures included a review of the disclosure controls’ and procedures’ objectives, design, implementation and the effect of the controls and procedures on the information generated for use in this report. In the course of our evaluation, we sought to identify data errors, control problems or acts of fraud and to confirm the appropriate corrective actions, including process improvements, were being undertaken. Based on the foregoing, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the period covered by this report, our disclosure controls and procedures were effective and operating at a level appropriate to provide reasonable assurance. There were changes in our internal controls during the first quarter of 2005. The Company’s former CFO resigned on January 31, 2006. On February 1, 2006, the Company’s former Controller was appointed as CFO.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

(a) Joglar Painting, Inc., Plaintiff v. Urecoats Industries Inc., Urecoats Manufacturing, Inc (n/k/a RSM Technologies, Inc.), et. al., Defendants

On August 20, 2004, the Company (under its former name of Urecoats Industries, Inc.) and its former RSM Technologies, Inc. subsidiary (which business was discontinued in 2004), were served notice that on June 24, 2004 in the United States District Court for the District of Puerto Rico the Plaintiff filed a complaint against the Defendants alleging breach of an Exclusive Distribution Agreement for the territory of Puerto Rico that was incorporated in a Sales Agreement entered into between RSM Technologies, Inc. and Joglar Painting, Inc. on May 21, 2002. The Plaintiff’s complaint essentially alleges that on October 29, 2003, the Company arbitrarily terminated the Plaintiff’s “exclusivity” rights under its agreement and as a result, it sustained damages aggregating $3,754,000. The Company believes the complaint and alleged damages to be totally without merit, has filed its answer denying the allegations and asserted counterclaims for monies billed and remaining unpaid for goods delivered to the Plaintiff by RSM Technologies, Inc. pursuant to the Plaintiff’s purchase order. On April 7, 2006, the Court entered partial judgment dismissing the claims asserted against Urecoats Industries, Inc. Discovery has not yet commenced and no trial date is set.

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

On October 3, 2003, in the Hillsborough County State Court, Division H, Plaintiffs filed a complaint against the Company, Michael T. Adams, and two former officers, individually, alleging common law fraud and rescission in connection with the purchase of common stock. During 2005, Plaintiffs added Richard J. Kurtz, individually. Plaintiff Hyer purchased $100,000 of common stock in June 2003 and Plaintiff Sun Coatings purchased $250,000 of common stock in July 2003. Plaintiffs allege that the Company and certain officers and a director failed to disclose the current financial condition of the Company and its former subsidiaries (notwithstanding the fact that Plaintiffs signed subscription agreements admitting they were provided all relevant and requested financial information). The Defendants’ motion to dismiss was denied by Order dated January 20, 2004. The Defendants answered the complaint on February 13, 2004 and asserted, among others, the affirmative defense that Plaintiffs’ claims are barred by the signed subscription agreements. Discovery has not yet commenced and no trial date is set.

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

Item 2. Changes in Securities and Use of Proceeds.

Recent Sales of Unregistered Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

See Index of Exhibits on Page 14.

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SIGNATURES

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

		LAPOLLA INDUSTRIES, INC.
Date:   May 15, 2006	By:	/s/ Michael T. Adams, CEO
		Michael T. Adams
		CEO
		LAPOLLA INDUSTRIES, INC.
Date:   May 15, 2006	By:	/s/ John A. Campbell, CFO
		John A. Campbell
		CFO and Treasurer

13

INDEX OF EXHIBITS

Exhibit Number	Description
10.1	Working Capital Commitment dated March 20, 2006 by and between Richard J. Kurtz and the Company.
10.2	Promissory Note dated February 8, 2006 from the Company to Richard J. Kurtz.
10.3	Promissory Note dated June 2, 2005 by and between Wachovia Bank, the Company, and Richard Kurtz.
10.4	Amendment dated March 24, 2006 to the Promissory Note dated June 2, 2005 by and between Wachovia Bank, the Company, and Richard Kurtz.
31.1	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.
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to § 906 of Sarbanes-Oxley Act of 2002.

14

EX-10.1

Exhibit 10.1

Richard J. Kurtz

Nine Duck Pond Road

Alpine, New Jersey 07632

March 20, 2006

LaPolla Industries, Inc.

15402 Vantage Parkway East

Suite 322

Houston, Texas 77032

Attention: Michael T. Adams, CEO

Re: LaPolla Industries, Inc. (the “Company”)

Working Capital Commitment

Gentlemen:

This is in response to your request that I provide an assurance as to funding of One Million Five Hundred Thousand Dollars ($1,500,000) to be used as working capital to facilitate growth and expansion for the Company, as and when such funds are deemed required by management. I hereby confirm that I so commit to provide during fiscal 2006, upon the request of management, One Million Five Hundred Thousand Dollars ($1,500,000) in cash funds for use as working capital by the Company. I understand that such funding will take the form of a demand loan bearing 6% interest per annum. This commitment will either be satisfied from personal funds, or, I will cause the funds to be otherwise provided by an appropriate lending institution.

I have been further advised and understand that the aforesaid commitment and obligation will be superseded in the event and to the extent that the Company is independently funded by a third party source in an amount of at least One Million Five Hundred Thousand Dollars ($1,500,000), either privately or institutionally, during fiscal 2006. In such event, I or the lending institution utilized by me, to the extent any funds have been loaned pursuant to the above commitment, shall be promptly repaid.

Very Truly Yours,

/s/ Richard J. Kurtz

Richard J. Kurtz

EX-10.2

Exhibit 10.2

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE MAKER THAT SUCH REGISTRATION IS NOT REQUIRED.

PROMISSORY NOTE

$ 3,000,000	New York, New York
	February 8, 2006

FOR VALUE RECEIVED, the undersigned, LaPolla Industries, Inc., a Delaware corporation, currently having its principal place of business located at Intercontinental Business Park, 15402 Vantage Parkway East, Suite 322, Houston, Texas 77032 (the “Maker”), promises to pay to Richard J. Kurtz an individual currently residing at Nine Duck Pond Road, Alpine, New Jersey 07632 (the “Holder”), the principal sum of Three Million ($3,000,000) and 00/100 Dollars, bearing interest thereon, at the rate of 6% per annum together with any costs, expenses and attorney fee’s incurred for the collection of this note before and after maturity, by acceleration or otherwise, principal to be paid on December 31, 2007 (the “Maturity Date”) when the entire amount outstanding hereunder shall be due and payable in full; provided, however, that if the Maker subsequent to the date hereof, but prior to the Maturity Date, shall have successfully completed a private debt or equity financing yielding gross proceeds to the Maker of not less than Seven Million 00/100 Dollars ($7,000,000) (hereinafter, the “Financing”) then the unpaid principal balance of this note shall immediately become due and payable concurrently with the closing of the Financing.

No delay or omission by the Holder in exercising any right hereunder, nor failure by the Holder to insist upon the strict performance of any terms herein, shall operate as a waiver of such right, any other right hereunder, or any terms herein. No waiver of any right shall be effective unless in writing and signed by the Holder, nor shall a waiver on one occasion be constituted as a bar to, or waiver of, any such right on any future occasion.

The rights and obligations under this note shall be construed in accordance with the laws of the State of New York.

Maker waives the right of presentment, demand for payment, notice of dishonor, notice of protest, protest and all other notices or demands of any kind in connection with the delivery, acceptance, performance, default, endorsement or guarantee of this instrument.

Maker:

LaPolla Industries, Inc.

A Delaware Corporation

By: /s/ Michael T. Adams, CEO

Name:  Michael T. Adams

Title:    CEO

EX-10.3

Exhibit 10.3

PROMISSORY NOTE

$2,000,000.00	June 2, 2005
	Newark, New Jersey

FOR VALUE RECEIVED, IFT CORPORATION, a Delaware corporation and RICHARD KURTZ jointly and severally, (“Borrower”), jointly and severally, hereby promises to pay to the order of WACHOVIA BANK, NATIONAL ASSOCIATION (“Bank”), at its offices at 190 River Road, Summit, New Jersey 07901, or such other place as Bank shall designate in writing from time to time, the principal sum of TWO MILLION DOLLARS (“2,000,000.00”) (the “Loan”) or such sum(s) as may be advanced from time to time (each an “Advance” and together the “Advances”), together with interest thereon as hereinafter provided.

1.ADVANCES.

1.1   No Obligation.Borrower acknowledges and agrees that Bank shall have no obligation to make any advances hereunder and that Advances, if any, may or may not be made hereunder in Bank’s sole and absolute discretion. Borrower hereby waives any rights that it may have arising out of any past or present agreement or representation that would require Bank to make any such Advances. This Note shall not be deemed to be a commitment or agreement by Bank to make any advances at any time, and is being executed and delivered by Borrower solely to set forth certain terms and conditions in the event Bank determines, in its sole and absolute discretion, to make any Advances hereunder.

1.2   Record of Advances. Bank may enter in its business records the amount and payment terms of each advance made hereunder. Bank’s records of each such Advance shall, in the absence of manifest error, be conclusively binding upon Borrower. In the event Bank provides confirmation of the terms of any Advance to Borrower, borrower agrees that unless Bank receives a written notification of exception to such statement or notice within ten (10) calendar days after such confirmation is mailed to Borrower, the confirmation shall be deemed an account stated, correct, acceptable and conclusively binding upon Borrower.

1.3   Advance Procedures. Each request for an Advance shall be in writing and shall be accompanied by a Notice of Borrowing Under Note in the form attached hereto as Exhibit A. Each Advance hereunder shall be made by crediting the Borrower’s account number: (on file) (“the Account”) at Bank. All Advances made by crediting the Account shall be conclusively presumed to have been properly authorized by Borrower. Requests for Advances to be made by any means other than crediting the Account shall be made in writing by Borrower to Bank.

2.INTEREST RATE. Interest shall be charged on the outstanding principal balance from the date hereof until the full amount of principal due hereunder has been paid at a rate equal to 1-month LIBOR plus TWO AND ONE QUARTER percent (2.25%) per annum (“LIBOR-Based Rate”), as determined by Bank prior to the commencement of each Interest Period. Interest shall be calculated daily on the basis of the actual number of days elapsed over a 360 day year. The LIBOR-Based Rte shall remain in effect, subject to the provisions hereof, from and including the first day of the Interest Period to and excluding the last day of the Interest Period for which it is determined.

“LIBOR” means, with respect to each day during each Interest Period, the rate for U.S. dollar deposits of one month maturity as reported on Telerate page 3750 as of 11:00 a.m., London time, on the second London business day before the relevant Interest Period begins (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation.

“Interest Period” means, initially, the period commencing on (and including) the date hereof and ending on (but excluding) the first Payment Date (as hereinafter defined), and thereafter, each period commencing on (and including) the last day of the immediately preceding interest Period and ending on (but excluding) the next Payment Date, provided,(i) any Interest Period that would otherwise end on (but exclude a day which is not a New York business day shall be extended to the next succeeding New York business day, unless such extension would carry such Interest Period into the next month, in which event such Interest Period shall end on (but exclude) the preceding New York business day; (ii) any Interest Period that ends in a month for which there is no day which numerically corresponds to the Payment date shall end on (but exclude) the last New York business day of such month, and (iii) any Interest Period that would otherwise extend the past Maturity date shall end on (but exclude) the Maturity Date.

3.PAYMENT OF PRINCIPAL AND INTEREST. Interest in the initial Advance from the date hereof through May 31, 2005, shall be due and payable upon execution hereof. Thereafter, all accrued and unpaid interest on the outstanding principal balance shall be due and payable on the first day of each month beginning on July 1, 2005 (each, a “Payment Date”). The entire unpaid principal amount hereof, together with accrued and unpaid interest thereon and all other amounts payable hereunder shall be due and payable on June 1, 2006 (the “Maturity Date”).

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4.APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment or prepayment, if any, made under this Note shall be applied to pay late charges, accrued and unpaid interest, principal, escrows (if any), and any other fees, costs and expenses which Borrower is obligated to pay under this Note, in such order as Bank may elect from time to time in its sole discretion.

5.TENDER OF PAYMENT. All payments on this Note are payable on or before 2:00 p.m. on the due date thereof, at the office of the Bank specified above and shall be credited on the date the funds become available lawful money of the United States. All sums payable to Bank which are due on a day on which Bank is not open for business shall be paid on the next succeeding business day and such extended time shall be included in the computation of interest.

6.LATE CHARGE. In the event that any installment of principal or interest required to be made under this Note shall not be received by Bank on or before its due date, Borrower shall pay to Bank, on demand, a late charge of five percent (5%) of such delinquent payment. The foregoing right is in addition to, and not in limitation of, any other rights which Bank may have upon Borrower’s failure to make timely payment of any amount due hereunder.

7.PREPAYMENTS.

7.1   Voluntary Prepayment. The Loan may be prepaid, in whole or in part, at any time and from time to time without premium or penalty.

7.2   Mandatory Prepayment. Upon receipt of cash proceeds from any capital contribution or any sale of issuance of IFT Corporation equity, the Net Equity Proceeds thereof shall be paid to Bank and applied in accordance with Section 4. “Net Equity Proceeds” shall mean, with respect to each issuance or sale of any equity or any capital contribution, the cash proceeds (net of reasonable costs associated therewith) received from the sale or issuance of equity or capital contribution.

8.SECURITY FOR THE NOTE. Borrower hereby grants to Bank a continuing security interest in all property of Borrower now or hereafter in the possession of Bank, as security for the payment of this Note and any other liabilities of Borrower to Bank, which security interest shall be enforceable and subject to all the provisions of this Note, as if such property were specifically pledged hereunder.

9.DEFAULT RATE. From and after the Maturity Date or from and after the occurrence of an Event of Default hereunder, irrespective of any declaration of maturity, all amounts remaining unpaid or thereafter accruing hereunder, shall, at Bank’s option, bear interest at a default rate of four percent (4%) per annum above the interest rate then in effect as set forth herein (the “Default Rate”), or the highest permissible rate under applicable usury law, whichever is less. Such default rate of interest shall be payable upon demand, but in no event later than when scheduled interest payments are due, and shall also be charged on the amounts owed by Borrower to Bank pursuant to any judgments entered in favor of Bank with respect to this Note.

10.         REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank as follows:

10.1 Organization, Powers. Each Borrower (i) is (a) an adult individual and is suijuris, or (b) a corporation, general partnership, limited partnership, limited liability company (as indicated below), duly organized, validly existing and in good standing under the laws of the state or its organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such authorization; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution and delivery and performance of, all of its obligations hereunder.

10.2 Execution. This Note has been duly executed and delivered by Borrower. Execution, delivery and performance hereof will not: (i) violate any of Borrower’s organizational documents, provision of law, order of any court, agency or other instrumentality of government, or any provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties is bound; (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature, other than the liens created hereby; and (iii) require any authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority.

10.3 Obligations of Borrower. This Note is the legal, valid and binding obligation of Borrower, enforceable against it in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally. Borrower is obtaining the Loan for commercial purposes.

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10.4 Litigation. There is no action, suit or proceeding at law or in equity or by or before any governmental authority, agency or other instrumentality now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its properties or rights which, if adversely determined, would mentally impair or affect: (i) the value of any collateral securing this Note; (ii) Borrower’s right to carry on its business substantially as now conducted (and as now contemplated); (iii) its financial condition; or (iv) its capacity to consummate and perform its obligations hereunder.

10.5 No Defaults.Borrower is not in default in the performance, observance or fulfillment of any of the obligation, covenants or conditions contained herein or in any material agreement or instrument to which it is a party or by which it or any of its properties is bound.

10.6 No Untrue Statements. Neither this Note nor any other document, certificate or statement furnished to Bank by or on behalf of Borrower contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. Borrower acknowledges that all such statements, representations and warranties shall be deemed to have been relied upon by Bank as an inducement to make the Loan to Borrower.

11.COVENANTS.

11.1 Minimum Tangible Net Worth. Borrower shall maintain, at all times throughout the term of the Loan (which covenant shall be tested annually at the time of submission of the financial statements described below), a minimum Tangible Net Worth of at least $100,000,000. “Tangible Net Worth” means, at any date, (i) the aggregate amount at which all assets of Borrower would be shown on a balance sheet at such date after deducting all assets properly classified as intangible assets (including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service marks and brand names), less (ii) the aggregate amount of indebtedness, liabilities and reserves of Borrower, excluding debt fully subordinated to Bank on terms and conditions acceptable to Bank.

11.2 Minimum Liquid Assets. Borrower shall maintain, at all times throughout the term of the Loan (which covenant shall be tested at the end of each calendar quarter), minimum Liquid Assets of at least $4,000,000. “Liquid Assets” means (i) cash and cash equivalents; (ii) state and municipal obligations; (iii) marketable securities having a share price of not less than $10.00 and an average daily volume of not less than 1,000,000 shares traded on the NYSE, AMEX or NASDAQ; (iv) deferred annuities, and (v) vested interests in profit sharing plans.

11.3 Minimum Portfolio Net Operating Income. Borrower shall maintain Portfolio Operating Income of not less than $25,000,000, measured annually. “Net Operating Income” means all income from an income-producing real estate entity minus cash operating expenses (excluding depreciation, amortization and mortgage debt interest expense). “Portfolio” means all income-producing real estate entities in which Mr. Kurtz maintains a financial interest.

11.4 Minimum Net Cash Flow to Borrower. Borrower shall maintain Net Cash Flow to Borrower of not less than $4,500,000, measured annually. “Net Cash Flow to Borrower” means the sum of the products of Net Cash Flow for each income-producing real estate entity for the period in question less all bank debt service requirements for the same period.

11.5 Operating Accounts. Borrower shall maintain its primary operating accounts at Bank.

11.6 Financial Statements; Compliance Certificate.

(a) Borrower shall furnish to Bank the following financial information, in each instance prepared in accordance with generally accepted accounting principles consistently applied:

(i)Not later than thirty (30) days after the end of each calendar year, annual financial statements of Borrower including, without limitation, statements of financial condition, income and cash flows, a reconciliation of net worth, a listing of all contingent liabilities. notes to financial statements and any other information requested by Bank, prepared on a compilation basis by a certified public accountant acceptable to Bank.

(ii)          Not later than thirty (30) days after filing with the Internal Revenue Service, a true and compete copy of the federal tax returns, including all schedules, of Borrower.

(iii)         Such information respecting the operations of Borrower as Bank may from time to time reasonably request.

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(b) Borrower shall furnish to Bank a compliance certificate within fifteen (15) days after the end of each calendar quarter, signed by Borrower’s chief financial officer and any individual Borrower, certifying: (i) that all representations and warranties of Borrower set forth in this Note or any other document provided to Bank remain true and correct as of the date of such compliance certificate; (ii) the specific Liquid Assets of Borrower in compliance with Section 11.2; (iii) that none of the covenants of Borrower contained herein has been breached; and (iv) to its knowledge, no event has occurred which constitutes an Event of Default (or which, with the giving of notice or the passage of time, or both, would constitute an Event of Default) hereunder. In addition, Borrower shall promptly notify Bank of the occurrence of any default, Event of Default, adverse litigation or material adverse litigation or material adverse change in its financial condition.

11.7 Indemnification.

(a) Borrower hereby indemnifies and agrees to defend and hold harmless Bank, its officers, employees and agents, from and against any and all losses, damages, or liabilities and from any suits, claims or demands, including reasonable attorneys’ fees incurred in investigating or defending such claim, suffered by any of them and caused by, arising out of, or in any way connected with the Loan (unless determined by a final judgment of a court of competent jurisdiction to have been caused solely by the gross negligence or willful misconduct of any of the indemnified parties) including, without limitation, any untrue statement of a material fact contained in information submitted to Bank by Borrower or the omission of any material fact necessary to be stated therein in order to make such statement not misleading or incomplete; or the failure of Borrower to perform any obligations herein required to be performed by Borrower.

(b) In case any action shall be brought against Bank, its officers, employers, employees or agents, in respect to which indemnity may be sought against Borrower, Bank or other such party shall promptly notify Borrower and Borrower shall assume the defense thereof, including the employment of counsel selected by Borrower and satisfactory to Bank, the payment of all costs and expenses and the right to negotiate and consent to settlement. Bank shall have the right, at its sole option, to employ separate counsel in any such action and to participate in the defense thereof, all at Borrower’s sole cost and expense. Borrower shall not be liable for any settlement of any such action effected without its consent (unless Borrower fails to defend such claim), but if settled with Borrower’s consent, or there be a final judgment for the claimant in any such action, Borrower agrees to indemnify and hold harmless Bank from and against any loss or liability by reason of such settlement or judgment.

(c) The provisions of this Section shall survive the repayment or other satisfaction of the Liabilities.

11.8 Private Offering. Any private placement of debt and/or equity securities to IFT Corporation shall disclose the co-borrower status of the Loan. Any disclosure or offering statement in connection therewith shall be subject to Bank’s review and approval.

12.EVENTS OF DEFAULT. Each of the following shall constitute an event of default hereunder (an “Event of Default”): (a) the failure of Borrower to pay any amount of principal or interest hereunder when due and payable; (b) the filing by or against Borrower of a petition seeking relief, or the granting of relief, under the Federal Bankruptcy Code or any similar federal or state statute; any assignment for the benefit of creditors made by Borrower, or the appointment of a custodian, receiver, liquidator or trustee for Borrower or for any of the property of Borrower, or any action by Borrower to effect any of the foregoing, or if Borrower becomes insolvent (however defined) or is not paying its debts generally as they become due; (c) the occurrence of any other default in any term, covenant or condition hereunder.

13.REMEDIES. If an Event of Default exists, Bank may exercise any right, power or remedy permitted by law or as set forth herein, including, without limitation, the right to declare the entire unpaid principal amount and all interest accrued hereon to be, and such principal, interest and other sums shall thereupon become, immediately due and payable.

14.MISCELLANEOUS.

14.1 Disclosure of Financial Information. Bank is hereby authorized to disclose any financial or other information about Borrower to any regulatory body or agency having jurisdiction over Bank and to any present, future or prospective participant or successor in interest in any loan or other financial accommodation made by Bank to Borrower. The information provided may include, without limitation, amounts, terms, balances, payment history, return item history and any financial or other information about Borrower.

14.2 Integration. This Note constitutes the sole agreement of the parties with respect to the transaction contemplated hereby and supersede all oral negotiations and prior writings with respect thereto.

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14.3 Attorney’s Fees and Expenses. If Bank retains the services of counsel by reason of a claim of a default or an Event of Default hereunder or on account of any matter involving this Note or the Loan, all costs of suit and all reasonable attorney’s fees and such other reasonable expenses so incurred by Bank shall be paid by Borrower, on demand, and shall be deemed part of the obligations evidenced hereby.

14.4 No Implied Waiver. Bank shall not be deemed to have modified or waived any of its rights or remedies hereunder unless such modification or waiver is in writing and signed by Bank, and then only to the extent specifically set forth herein. A waiver in one event shall not be construed as continuing or as a waiver of or bar to such right or remedy in a subsequent event. After any acceleration of, or the entry of any judgment on, this Note, the acceptance by Bank of any payments by or on behalf of Borrower on account of the indebtedness evidenced by this Note shall not cure or be deemed to cure any Event of default or reinstate or be deemed to reinstate the terms of this Note absent an express written agreement duly executed by Bank and Borrower.

14.5 Waiver. Borrower, jointly and severally, waives demand, notice, presentment, protest, demand for payment, notice of dishonor, notice of protest and diligence of collection of this Note. Borrower consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Bank with respect to the payment or other provisions of this Note, and to the release of any collateral, with or without substitution. Borrower agrees that makers, endorsers, guarantors and sureties may be added or released without notice and without affecting Borrower’s liability hereunder. The liability of Borrower shall not be affected by the failure of Bank to perfect or otherwise obtain or maintain the priority or validity of any security interest in any collateral. The liability of Borrower shall be absolute and unconditional and without regard to the liability of any other party hereto.

14.6 No Usurious Amounts. Anything herein contained to the contrary notwithstanding, Borrower does not agree and shall not be obligated to pay interest hereunder at a rate which is in excess of the maximum rate permitted by law. If by the terms of this Note, Borrower is at any time required to pay interest at a rate in excess of such maximum legal rate and the portion of all prior interest payments in excess of such maximum legal rate shall be applied to and shall be deemed to have been payments in reduction of the outstanding principal balance. Borrower agrees that in determining whether or not any interest payable under this Note exceeds the highest rate permitted by law, any non-principal payment, including without limitation, late charges, shall be deemed to the extent permitted by law to be an expense, fee or premium rather than interest.

14.7 Partial Invalidity. The invalidity or unenforceability of any one or more of the provisions of this Note shall not render any other provision invalid or unenforceable. In lieu of any invalid or unenforceable provision, there shall be added automatically a valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible.

14.8 Binding Effect. The covenants, conditions, waivers, releases and agreements contained in this Note shall bind, and the benefits thereto shall inure to, the parties hereto and their respective heirs, executors, administrators, successors and assigns; provided, however, that this Note cannot be assigned by Borrower without the prior written consent of Bank, and any such assignment or attempted assignment by Borrower shall be void and of no effect with respect to Bank.

14.9 Modifications. This Note may not be supplemented, extended, modified or terminated except by an agreement in writing signed by the party against whom enforcement of any such waiver, change, modification or discharge is sought.

14.10          Sales or Participations. Bank may from time to time pledge, sell or assign, in whole or in part, or grant participations in, the Loan, this Note and/or the obligations evidenced thereby. The holder of any such sale, assignment or participation, if the applicable agreement between Bank; and such holder so provides shall be (a) entitled to all of the rights, obligations and benefits of Bank; and (b) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to Borrower, in each case as fully as though Borrower were directly indebted to such holder. Bank may in its discretion give notice to Borrower of such sale, assignment or participation’ however, the failure to give such notice shall not affect any of Bank’s or such holder’s rights hereunder.

14.11          Jurisdiction. Borrower irrevocably appoints each and every owner, partner and/or officer of Borrower as its attorneys upon whom may be served, by regular or certified mail at the address set forth below, any notice, process or pleading in any action or proceeding against it arising out of or in connection with this Note or the Loan; and Borrower hereby consents that any action or proceeding against it be commenced and maintained in any court within the State of New Jersey by service of process on any such owner, partner and/or officer; and Borrower agrees that the courts of such State shall have jurisdiction with respect to the subject matter hereof and the person of Borrower and all collateral securing the obligations of Borrower. Borrower agrees not to assert any defense to any action or proceeding initiated by Bank based upon improper venue or inconvenient forum.

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14.12          Notices. All notices and communications under this Note shall be in writing and shall be given by either (a) hand delivery, (b) first class mail (postage prepaid), or (c) reliable overnight commercial courier (charges prepaid), to the following addresses:

If to Bank:	If to Borrower:
Wachovia Bank, National Association	IFT Corporation
190 River Road	718 South Military Trail
Summit, New Jersey 07901	Deerfield Beach, FL 33442
Attn: Brian C. Hill	Michael T. Adams, CEO
With a copy to:
McCarter and English LLP	Richard J. Kurtz
Four Gateway Center	c/o Kamson Corporation
100 Mulberry Street	270 Sylvan Avenue
Newark, New Jersey 07101	Englewood Cliffs, NJ 07632
Attn: Edward J. Butler, Jr., Esq.

Notice shall be deemed to have been given and received (i) if my hand delivery, upon delivery; (ii) if by mail, three (3) calendar days after the date first deposited in the United States mail and (iii) if by overnight courier, on the date scheduled for delivery. A party may change its address by giving written notice to the other party as specified herein.

14.13          Governing Law. This Note shall be governed by and construed in accordance with the substantive laws of the State of New Jersey without reference to conflict of laws principles.

14.14          Joint and Several Liability. If Borrower consists of more than one person or entity, the word “Borrower” shall mean each of them and their liability shall be joint and several.

14.15          Continuing Enforcement. If, after receipt of any payment of all or any part of this Note, Bank is compelled or agrees, for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, any impermissible setoff, or a diversion of trust funds), then this Note shall continue in force and effect or be reinstated, as the case may be, and Borrower shall be liable for and shall indemnify, defend and hold harmless Bank with respect to, the full amount so surrendered. The provisions of this Section shall survive the cancellation or termination of this Note and shall remain effective notwithstanding the payment of the obligations evidenced hereby, the release of any security interest, lien or encumbrance securing the Note or any other action which Bank may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the obligations evidenced hereby having become final and irrevocable.

14.16         Arbitration. Upon demand of either Borrower or Bank, whether made before or after institution of any judicial proceeding, any claim or controversy arising out of or relating to the Loan (a “Dispute”) shall be resolved by binding arbitration conducted under and governed by the Commercial Financial Disputes Arbitration Rules (the “Arbitration Rules”) of the American Arbitration Association (the “AAA”) and the Federal Arbitration Act. Disputes may include, without limitation, tort claims, counterclaims, a dispute as to whether a matter is subject to arbitration, claims brought as class actions, or claims arising from documents executed in the future. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding the foregoing, this arbitration provision does not apply to disputes under or related to swap agreements. Special Rules. All arbitration hearings shall be conducted in the city named in the address of Bank first stated above. A hearing shall begin within ninety (90) days of demand for arbitration and all hearings shall conclude within 120 days of demand for arbitration. These time limitations may not be extended unless a party shows cause for extension and then for no more than a total of 60 days. The expedited procedures set forth in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000.00. Arbitrators shall be licensed attorneys selected from the Commercial Financial Dispute Arbitration Panel of the AAA. The parties do not waive applicable Federal or state substantive law except as provided herein. Preservation and Limitation of Remedies. Notwithstanding the preceding binding arbitration provisions, Borrower and Bank agree to preserve, without diminution, certain remedies that any party may exercise before or after an arbitration proceeding is brought. The parties shall have the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale or under applicable law by judicial foreclosure including a proceedings to confirm the sale; (ii) all rights of self-help including peaceful occupation of real property and collection of rents, set-off, and peaceful possession of personal property; (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment. attachment, appointment of receiver and filing an involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by confession by confession of judgment. Any claim or controversy with regard to any party’s entitlement to such remedies is a Dispute.

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14.17          Waiver of Jury Trial. BORROWER AND BANK AGREE THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR BORROWER ON OR WITH RESPECT TO THIS NOTE, THE LOAN OR THE DEALINGS OF THE PARTIES WITH RESPECT TO THIS NOTE, THE LOAN OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BANK AND BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY, AND WITH THE ADVICE OF THEIR RESPECTIVE COUNSEL, WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS NOTE AND THAT BANK WOULD NOT EXTEND CREDIT TO BORROWER IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS NOTE.

IN WITNESS WHEREOF, Borrower, intending to be legally bound, has duly executed and delivered this Note as of the day and year first above written.

	IFT CORPORATION
WITNESS
Anne T. Hicks	By:	/s/ Michael T. Adams, CEO
Name:	Name: Michael T. Adams
	Title: Chief Executive Officer
Krystin Wahl	/s/ Richard Kurtz
Name:	Richard Kurtz, Individually

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EXHIBIT A

NOTICE OF BORROWING UNDER NOTE

The Borrower, as that term is used in the Promissory Note dated June __, 2005 (the “Note”), hereby notifies the Bank that it requires a borrowing (“Borrowing”) in the amount of $_______________________ or confirms to the Bank the prior oral request for the Borrowing under the Note, as amended, if amended. The Borrowing has been or will be deposited into Account #______________________, an account opened in the name of the Borrower

To induce the Bank to fund the Borrowing, the Borrower and Guarantor(s) of the Borrower’s obligations to the Bank, if such exist, hereby affirms or affirm the following:

· The representations and warranties of the Borrower and Guarantor(s) as contained in the Note, Guaranty(s) and other Loan Documents continue to be correct.

· No Event of Default, as defined in the Note, has occurred and is continuing.

· No adverse change has occurred in the Borrower’s financial or general condition since the Note’s date;

· The Borrower and Co-Borrower are in compliance with all of the covenants set forth in the Loan Documents; and

· The Note and any ancillary Loan Documents remain in full force and effect.

This notification is made on the _____ day of _______________ in the year ________.

BORROWER:
By:
	Richard J. Kurtz, Individually
IFT Corporation
By:
	Michael T. Adams
	Chief Executive Officer

Acknowledged and Accepted:

Wachovia Bank, N.A.

EX-10.4

Exhibit 10.4

AMENDMENT TO NOTE

THIS AMENDMENT TO NOTE dated as of the 24^th day of March, 2006, by and between LAPOLLA INDUSTRIES, INC. (f/k/a IFT CORPORATION), a Delaware corporation, and RICHARD KURTZ (jointly and severally, “Borrower”), jointly and severally, hereby promise to pay to the order of WACHOVIA BANK, NATIONAL ASSOCIATION (“Lender”), at its offices at 190 River Road, Summit, New Jersey 07901

WHEREAS, on June 2, 2005, Borrower executed and delivered a Promissory Note (the “Original Note”) evidencing a loan (the “Original Loan”) in the amount of Two Million Dollars ($2,000,000.00) from Lender; and

WHEREAS, Borrower has requested and Lender has agreed to increase the principal amount of the Original Loan as provided herein;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, Lender and Borrower agree as follows:

1. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed them in the Original Note.

2. As of the date set forth above, the aggregate principal balance of the Original Loan is increased by Five Hundred Thousand Dollars ($500,000.00)(the “Loan Increase”) to a total of Two Million Five Hundred Thousand Dollars ($2,500,000.00)(the “Original Loan as so modified, the “Loan”). The Original Note is hereby deemed amended accordingly to reflect the increased principal amount (the Original Note as so modified, the “Note”).

3. All accrued and unpaid interest on the outstanding principal balance shall be due and payable on each Payment Date through January 1, 2007. Thereafter, on each Payment Date, Borrower shall make payments of $208,333.33 principal plus all accrued and unpaid interest. The Maturity Date is extended to January 1, 2008.

4. Any default by any Borrower under any other obligation of any Borrower to Bank, whether currently existing or incurred in the future, including any contingent liabilities under guaranties, shall be deemed a default hereunder.

5. All other terms and conditions of the Original Note shall remain in full force and effect.

6. The terms hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

7. Borrower represents and warrants to Lender that there exists no defense, offsets or counterclaims with respect to Borrower’s obligations under the Note as amended.

8. This Amendment to Note may be executed in counterparts, such counterparts together constituting but one and the same agreement.

9. This Amendment to Note may not be changed or terminated except by an agreement in writing signed by Borrower and Lender.

10.          This Amendment to Note shall be governed by and construed in accordance with the laws of the State of New Jersey, without regard to principles of conflicts of law.

11.          Except as provided herein, the terms and provisions and covenants of the Note are in all other respects hereby ratified and confirmed and shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.

WACHOVIA BANK, NATIONAL ASSOCIATION

By: /s/ Brian Hill

Name: Brian C. Hill

Title: Vice-President

LAPOLLA INDUSTRIES, INC.

By: /s/ Michael T. Adams, CEO

Name: Michael T. Adams

Title: CEO

/s/ Richard Kurtz

Richard Kurtz

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael T. Adams, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LaPolla Industries, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: May 15, 2006	LAPOLLA INDUSTRIES, INC.
	By:	/s/ Michael T. Adams, CEO
		Michael T. Adams
		Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, John A. Campbell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of LaPolla Industries, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: May 15, 2006	LAPOLLA INDUSTRIES, INC.
	By:	/s/ John A. Campbell, CFO
		John A. Campbell
		Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

Certification of Principal Executive Officer

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

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

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

Date: May 15, 2006

LAPOLLA INDUSTRIES, INC.
By:	/s/ Michael T. Adams, CEO
	Michael T. Adams
	Principal Executive Officer

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

Certification of Principal Financial Officer

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

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2006 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

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

Date: May 15, 2006

LAPOLLA INDUSTRIES, INC.
By:	/s/ John A. Campbell, CFO
	John A. Campbell
	Principal Financial Officer

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