ITEM 2. MANAGEMENT?S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Three Months Ended June 30, 2008 as compared to Three Months Ended June 30, 2007 Results of Operations

The following table sets forth, for the periods indicated, certain information related to our operations, expressed in dollars and as a percentage of our net sales:

Three Months Ended June 30, 2008:

Net sales

Net sales totaled $3,711,073 for the three months ended June 30, 2008, as compared to $4,881,033 for the same period in 2007, or a decrease of 25%. Home Builders Research reported that new home sales are down 25.4 percent in Las Vegas and the year to date 2008 metro Phoenix housing market continues at a pace 39% below that of last year and permit activity is down 64%. Our revenue is derived from new construction of residential housing and is directly related to new home sales and permits for new residential construction as well as commercial construction.

Cost of sales

Cost of sales, including all installation expenses, during the three months ended June 30, 2008 was 92.6% of net sales, as compared to 68.4% in 2007. We are anticipating competition to increase and downward pressure on our gross margin during the next year as current and potential competitors seek new revenue streams.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2008 were $1,065,997 or 29% of net sales as compared to $1,056,301 or 21.6% of net sales during the same period of the prior year. Selling, general and administrative expenses increased by $9,696 for the three month period ending June 30, 2008 versus the three month period ending June 30, 2007.

Our Chief Executive Officer and Chief Operating Officer, who together own approximately 75% of the outstanding shares of common stock, have salaries of $500,000 per year. Last year they had salaries of $200,000 and also received distributions of the Subchapter S Earnings (a non income cash disbursement). The increase in the salaries of the Chief Executive Officer, Chief Operating Officer and CFO resulted in additional expense of $187,501 versus the same period in the prior year.

Provision for income taxes

The Company recorded no provision for income taxes for the three months ended June 30, 2008.