This financial review presents our operating results for the three months ended March 31, 2009 and 2008, and our financial condition at March 31, 2009. 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 some of these risks, uncertainties and other factors throughout this report and provide a reference to additional risks under the caption "Risk Factors" in Item 1A of Part II below. In addition, the following review should be read in connection with the information presented in our financial statements and the related notes for the year ended December 31, 2008, including any amendments thereto.

Performance for the Three Months Ended March 31, 2009 compared to the Three Months Ended March 31, 2008

Overall Results of Operations

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

March 31, 2009 March 31, 2008 Sales $ 9,740,080 $ 8,173,243

Our sales increased $1,566,837, or 19.2%, for the first quarter of 2009 compared to the first quarter of 2008, due primarily to a 40% increase in foam segment sales, partially offset by a decline in coating segment sales. Despite some of the worst economic conditions in decades, including a severely depressed new housing market, our foam business increased market share as consumers continue to search for energy cost savings. Home builders are looking to differentiate their products lines at all levels by offering high performance home models to meet growing consumer demand for overall energy efficiency. Heightened consumer awareness of "green building materials" has promoted the use of spray polyurethane foam in new homes as increases in the cost of insulation are more than offset by savings in HVAC system costs, lower ongoing energy bills, and additional consumer comfort.

Cost of sales increased $767,651, or 11.5%, for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due to higher sales volumes in our Foam segment.

Our gross profit increased $799,186, or 53%, for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008, due to an increase in sales in our foam segment, augmented by raw material price declines, partially offset by a decrease in sales in our coatings segment. Gross margin percentage increased 5.3% for the first quarter of 2009 compared to the first quarter of 2008 due to raw material price declines and manufacturing efficiencies in our foam segment.

Our total operating expenses are comprised of selling, general and administrative expenses, or SG&A, professional fees, depreciation and amortization, consulting fees, interest expense, and gain on derivative liabilities. These total operating expenses increased $760,705, or 29%, for the first quarter of 2009 compared to the first quarter of 2008, due to an increase of $544,148 for SG&A, $86,146 for depreciation and amortization (non-cash), $49,390 for consulting fees, and $100,554 for interest expense, $18,279 for interest expense - related party, $169,237 interest expense - amortization of discount (non-cash), and a gain of $125,482 in derivative liabilities (non-cash), offset by a decrease of $81,562 in professional fees.

SG&A increased $544,148, or 25.4%, for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008, due primarily to additional costs associated with AirTight (acquired July 1, 2008), as well as costs related to increased foam segment volumes (payroll, commissions, travel, advertising, and marketing). These SG&A expenses included increases of $477,636 for payroll and related employee benefits, $23,246 for sales commissions, $27,689 for insurances, $55,865 for travel and related services, $25,256 for advertising, $80,054 for marketing and promotions, $124,203 for rents, and $249,743 for bad debts, offset by decreases of $40,349 in recruiting fees, $193,275 for share based compensation expenses, $40,180 for investor relations, and $245,731 for corporate expenses.

Professional fees decreased $81,562, or 37.6%, for the first quarter of 2009 compared to the first quarter of 2008, due to disproportionately higher than expected audit, audit related services, and compliance costs in the first quarter of 2008.

Depreciation and amortization expense increased $86,140, or 189.4%, for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due primarily to the acquired assets of AirTight.

Consulting fees were $61,725 for the first quarter of 2009 compared to $12,335 for the first quarter of 2008 due to an increase in outside professional services.

Interest expense increased $100,554, or 63.2%, for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due to an increase in the interest from the capital utilized related to our ComVest credit instruments.

Interest expense - related party increased $18,279, or 448.3%, for the first quarter of 2009 compared to the first quarter of 2008 due to utilizing capital from the Chairman of the Board's financial commitment to the Company.

Interest expense - amortization of discount increased $169,237, or 381.8%, for the three months ended March 31, 2009 compared to the three month period ended March 31, 2008, due to an increase in the discount being amortized from the restructuring of our Convertible Term Note and Revolving Credit Note with ComVest on June 30, 2008.

Gain on derivative liabilities was $125,482 for the first quarter of 2009 compared to $-0- in the first quarter of 2008 due to the implementation of the accounting pronouncement EITF 07-05 during the first quarter of 2009.

Net loss for the three months ended March 31, 2009 was $1,081,533 compared to $1,120,014 for the three months ended March 31, 2008 as increases in sales and gross profit were offset by higher operating expenses. Net loss per share for the first quarter of 2009 was $0.017 compared to $0.019 for the first quarter of 2008.

Net loss available to common stockholders and related loss per share for the three months ended March 31, 2009 was $1,283,133 and $0.020 compared to $1,323,297 and $0.022 for the three months ended March 31, 2008. Dividends accrued on our outstanding Series D Preferred Stock were $201,600 for the quarter ended March 31, 2009 compared to $203,283 for the quarter ended March 31, 2008.

Results of Business Segments

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

Segments    March 31, 2009       March 31, 2008
Foam       $      8,459,784     $      6,063,420
Coatings          1,280,296            2,109,823
Total      $      9,740,080     $      8,173,243

Foam sales increased $2,396,364, or 39.5%, for the quarter ended March 31, 2009 compared to the quarter ended March 31, 2008, due to increased volumes from market share gains, as spray polyurethane foam continues to replace conventional insulation such as fiberglass. Consumers and building owners alike continue to seek "green building solutions" that provide energy costs savings. Cost of sales increased $1,354,431, or 26.8%, for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due to higher sales volumes. Gross profit increased $1,041,933, or 103.3%, for the first quarter of 2009 compared to the first quarter of 2008, due to higher sales volumes, reductions in raw material pricing, and improved manufacturing efficiencies. Segment loss decreased $149,519, or 47.6%, primarily from increased volumes and margin improvements.

Coatings sales decreased $829,527, or 39.3%, with a corresponding decrease in our cost of sales of $586,780, or 36.4%, and gross profit of $242,746, or 48.7%, for the three months ended March 31, 2009 compared to the three months ended March 31, 2008, due to a reduction in sales volume. We had a segment loss of $79,609 for the quarter ended March 31, 2009 compared to a segment profit of $38,257 for the quarter ended March 31, 2008, due to lower sales and margin.

Liquidity and Capital Resources

Net cash used in our operations was $1,659,632 for the three months ended March 31, 2009 compared to $1,064,622 for three months ended March 31, 2008. The cash used in operations for the three months March 31, 2009 was attributable to our net loss for the period, including the effect of adjustments to reconcile net loss to cash provided by or used in operating activities and adjusting for non-cash items, offset by decreases in trade receivables, inventories, prepaid expenses and other current assets, deposits and other non-current assets, while the declines in accounts payable, accrued expenses and other current liabilities, and other liabilities contributed to an increase in the cash used in our operations. Although a marked improvement in our gross profit in the first quarter of 2009 led to an increase in our operating cash flow, we continue to rely on our ComVest Credit Facility and financial commitment from the Chairman of the Board to fund our operations and believe such facilities to be sufficient to meet our working capital requirements. We are also seeking to raise additional capital from private placements of debt or common or preferred stock from accredited sophisticated investors to further accelerate our sales growth.

Net cash used in investing activities was $25,133 for the quarter ended March 31, 2009 compared to $42,184 for the quarter ended March 31, 2008, for minor capital additions.

Net cash provided by financing activities was $1,719,328 for first quarter of 2009 compared to $823,424 for the first quarter of 2008. We made principal repayments of $25,672 on our long term debt, received proceeds of $1,750,000 from our Chairman of the Board for working capital, and paid $5,000 for Series D Preferred Stock dividends, in the first quarter of 2009.