U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 THE FISCAL YEAR ENDED MARCH 31, 2006.

                          Commission File Number 0-5278
                                 IEH CORPORATION
                 (Name of Small Business Issuer in Its Charter)

                NEW YORK                                 13-5549348
     (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
             Incorporation)


        140 58th Street, Suite 8E
           Brooklyn, NY 11220                          (718) 492-9673
(Address of Principal Executive Offices)         (Issuer's Telephone Number,
                                                    Including Area Code)


Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Act: Common Stock, $.01 Par
Value Per Share

Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the past 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes|_| No|X|

The Registrant's revenues for the fiscal year ended March 31, 2006 were
$7,588,253.

The number of shares of Common Stock of the Registrant issued and outstanding as
of July 14, 2006 was 2,303,468.

The aggregate market value of the Registrant's voting stock (consisting of
Common Stock, $1.00 par value held by non-affiliates, computed by reference to
the closing price ($2.24) at which stock was sold on June 28, 2006, the last
trading day on which stock was reported to be sold, was $3,034,718.40.

DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format: Yes|_| No|X|

                                      -1-
<PAGE>
--------------------------------------------------------------------------------
                                 IEH CORPORATION

                                     PART I

Item 1.  Business

         IEH Corporation (hereinafter referred to as the "Company") was
         organized under the laws of the State of New York on March 22, 1943
         under the name Industrial Heat Treating Company, Inc. On March 15,
         1989, the Company changed its name to its current name. The Company's
         executive offices and manufacturing facilities are located at 140 58th
         Street, Suite 8E, Brooklyn, New York 11220. The Company's telephone
         number is (718) 492-4448; Fax: 718-492-9898; its email address is
         ieh@iehcorp.com.

         The Company has been approved by the federal government as a "Hub-zone
         small business Company". This classification is monitored, and while
         the Company must remain competitive, it is taken into account by large
         business concerns when awarding specific contracts.

         The majority of the Company's customers require that the Company
         maintain quality system in strict accordance with ISO9001. This is an
         International Standard Organization specification for which the Company
         has recently been audited and has received certification to ISO:2000.
         The Company's quality policy is: "Listening to our Customers and
         meeting their needs, while continuously improving our processes and
         services."

         The Company has developed a web site that reflects the standard catalog
         items we produce. The web site is an ongoing project and we will
         continue to add special items and newsworthy information to it. The
         Company's web site can be viewed by going to: http://www.iehcorp.com.

         The Company designs, develops and manufactures printed circuit
         connectors for high performance applications. Our customers consist of
         OEM's (Original Equipment Manufacturers), and Distributors who sell our
         products to OEMs. We sell our products directly and through regional
         representatives located in the United States, Canada and Europe.

         The customers we service are in the government, aerospace, medical,
         automotive, test equipment and commercial electronics markets. We
         appear on the Military Qualified Product Listing "QPL" to MIL-C-55302
         and supply customer requested modifications to this specification.
         Sales to the commercial electronic market and military defense market
         were 26% and 74% of the Company's net sales for the year ended March
         31, 2006.

         In order to remain competitive, the Company has an internal program to
         upgrade and maintain machinery (to increase production), review
         material costs and increase labor force productivity.

         New Product Development

         The Company is sought after by many of its customers to design and
         manufacture custom connectors for them. This environment has resulted
         in the development of many new products and technologies.

         The Company has developed a new technology for a high speed connector
         module for one of its customers. Because this technology has been so
         well received, it will be used in 5 (five) other programs the customer
         has under contracts.

                                      -2-
<PAGE>

                                 IEH CORPORATION

                                     PART I

Item 1.  Business (continued)

         New Product Development (continued)

         In addition to the many standard products we manufacture, it is in the
         area of custom connector design and manufacture that the Company faces
         its biggest challenge. To meet this challenge, we are able to draw upon
         our dedicated staff of engineers. We work with many designs and will
         continue to support our customers in all their requirements.

         Commitments

         The Company has a collective bargaining multi-employer pension plan
         ("Multi-Employer Plan") with the United Auto Workers of America, Local
         259. Contributions are made in accordance with a negotiated labor
         contract and are based on the number of covered employees employed per
         month. With the passage of the Multi-Employer Pension Plan Amendments
         Act of 1990 ( the "Act"), the Company may become subject to liabilities
         in excess of contributions made under the collective bargaining
         agreement. Generally, these liabilities are contingent upon the
         termination, withdrawal, or partial withdrawal from the Multi-Employer
         Plan. The Company has not taken any action to terminate, withdraw or
         partially withdraw from the Multi-Employer Plan nor does it intend to
         do so in the future. Under the Act, liabilities would be based upon the
         Company's proportional share of the Multi-Employer Plan's unfunded
         vested benefits, which is currently not available. The amount of
         accumulated benefits and net assets of such Plan also is not currently
         available to the Company. The total contributions charged to operations
         under such Plan were $62,771 for the year ended March 31, 2006 and
         $54,643 for the year ended March 25, 2005.

         On June 30, 1995, the Company applied to the Pension Benefit Guaranty
         Corporation ("PBGC") to have the PBGC assume all of the Company's
         responsibilities and liabilities under its Salaried Pension Plan. On
         April 26, 1996, the PBGC determined that the Salaried Pension Plan did
         not have sufficient assets available to pay benefits, which were and
         are currently due under the terms of such Plan.

         The PBGC further determined that pursuant to the provisions of the
         Employment Retirement Income Security Act of 1974, as amended ("ERISA")
         that the Salaried Pension Plan must be terminated in order to protect
         the interests of such Plan's participants. Accordingly, the PBGC
         proceeded pursuant to ERISA to have the Salaried Pension Plan
         terminated and the PBGC appointed as statutory trustee, and to have
         July 31, 1995 established as the Plan's termination date.

         The Company and the PBGC have agreed to the terms of a settlement of
         the matter. The agreement is effective July 2, 2001. Under the
         agreement, the Company and the PBGC agreed on a total sum of $244,000.
         The Company has agreed to make payments as follows:

         September 1, 2003 to August 1, 2004                $2,000 per month
         September 1, 2004 to August 1, 2006                $3,000 per month
         September 1, 2006 to August 1, 2007                $4,000 per month

         Additionally, the Company has made balloon payments of $25,000 each on
         January 1, 2004, May 1, 2004, May 1, 2005 and January 1, 2006.

                                      -3-
<PAGE>

                                 IEH CORPORATION

                                     PART I

Item 1.  Business (continued)

         Commitments (continued)

         The Company also granted the PBGC a lien on the Company's machinery and
         equipment.

         As a result of this agreement the amount due the PBGC was restated to
         $244,000. $86,000 was paid during the year ended March 31, 2006,
         $56,000 was paid during the year ended March 25, 2005 and $39,000 was
         paid during the year ended March 26, 2004. The remaining balance of
         $63,000 is reported as follows: $43,000 as a current liability and
         $20,000 as a long-term liability in the accompanying financial
         statements.

         Marketing and Sales

         The market for connectors and interconnection devices, domestic and
         worldwide, is highly fragmented as a result of the manufacture by many
         companies of a multitude of different types and varieties of
         connectors. For example, connectors include: printed circuit,
         rectangular I/O, circular, planar (IOC) RF coax, IC socket and fiber
         optic. The Company has been servicing a niche in the market by
         manufacturing HYPERTAC (TM) connectors and innovative Company-designed
         printed circuit connectors such as the COMTAC connectors. Previously,
         the Company was one of only three licensed manufacturers of the
         HYPERTAC (TM) design in the United States. In fiscal year 1996, the
         Company learned that the other two licensees had merged. Moreover, the
         Company, based upon advice of counsel, determined that the HYPERTAC
         technology was no longer protected by a patent, and therefore was in
         the public domain. As a result, the Company notified the licensor that
         it would no longer be bound by the terms of its license agreement and
         the Company ceased making license payments. The Company has received a
         brief notice from the licensor that it disputed the Company's
         interpretations and demanded return of certain equipment. No legal
         proceedings have been instituted by the licensor and the Company has
         not received any further notices. The Company does not anticipate
         manufacturing other types of connectors in the immediate future. The
         Company is continuously experimenting with innovative connection
         designs, which may cause it to alter its marketing plans in the future
         if a market should develop for any of its current or future innovative
         designs.

         The Company's products are marketed to original equipment manufacturers
         directly and through distributors serving primarily the government,
         military, aerospace and commercial electronics markets. The Company is
         also involved in developing new connectors for specific uses, which
         result from changes in technology. This includes the COMTAC connectors.
         The Company assists customers in the development and design of
         connectors for specific customer applications. This service is marketed
         to customers who require the development of connectors and
         interconnection devices specially designed to accommodate the customers
         own products.

         The Company is primarily a manufacturer and its products are
         essentially basic components of larger assemblies of finished goods.
         Approximately 91% and 92% of the Company's net sales for the years
         ended March 31, 2006 and March 25, 2005, respectively, were made
         directly to manufacturers of finished products with the balance of the
         Company's products sold to distributors. Distributors often purchase
         connectors for customers who do not require large quantities of
         connectors over a short period of time but rather require small
         allotments of connectors over an extended period of time.

         One customer of the Company accounted for 19% and 34% of the Company's
         net sales for the years ended March 31, 2006 and March 25, 2005,
         respectively.

                                      -4-
<PAGE>

                                 IEH CORPORATION

                                     PART I

Item 1.  Business (continued)

         Marketing and Sales (continued)

         The Company currently employs 14 independent sales representatives to
         market its products in all regions in the United States.

         Backlog of Orders/Capital Requirements

         These independent sales representatives also promote the product lines
         of other electronics manufacturers; however, they do not promote the
         product lines of competitors, which compete directly with the Company's
         products. These sales representatives accounted for approximately 94%
         of Company sales (with the balance of Company sales being generated via
         direct customer contact) for the year ended March 31, 2006.

         International sales accounted for less than 1% of sales for the years
         ended March 31, 2006 and March 25, 2005.

         The backlog of orders for the Company's products amounted to
         approximately $1,830,000 at March 31, 2006, as compared to $2,600,000
         at March 25, 2005. A portion of these orders are subject to
         cancellation or postponement of delivery dates and, therefore, no
         assurance can be given that actual sales will result from these orders.
         The Company does not foresee any problems, which would prevent it from
         fulfilling its orders.

         Competition

         The design, development, manufacture and distribution of electrical
         connectors and interconnection devices is a highly competitive field.
         The Company principally competes with companies who produce high
         performance connectors in printed circuits and wireboards for high
         technology application. The Company competes with respect to their
         abilities to adapt certain technologies to meet specific product
         applications; in producing connectors cost-effectively; and in
         production capabilities. In addition, there are many companies who
         offer connectors with designs similar to those utilized by the Company
         and are direct competitors of the Company.

         The primary basis upon which the Company competes is product
         performance and production capabilities. The Company usually receives
         job orders after submitting bids pursuant to customer-issued
         specifications. The Company also offers engineering services to its
         customers in designing and developing connectors for specialized
         products and specific customer applications. This enables the Company
         to receive a competitive advantage over those companies who basically
         manufacture connectors based solely or primarily on cataloged
         specifications. Many of the Company's competitors have greater
         financial resources, market penetration and experience than the Company
         and no assurances can be given that the Company will be able to compete
         effectively with these companies in the future.

                                      -5-
<PAGE>

                                 IEH CORPORATION

                                     PART I


Item 1.  Business (continued)

         Suppliers of Raw Materials and Component Parts

         The Company utilizes a variety of raw materials and manufactured
         component parts, which it purchases from various suppliers. These
         materials and components are available from numerous sources and the
         Company does not believe that it will have a problem obtaining such
         materials in the future. However, any delay in the Company's ability to
         obtain necessary raw materials and component parts may affect its
         ability to meet customer production needs. In anticipation of such
         delays, the Company carries an inventory of raw materials and component
         parts to avoid shortages and to insure continued production.

         Research & Development

         The Company provides personalized engineering services to its customers
         by designing connectors for specific customer applications. The
         employment of electromechanical engineers is the anticipated
         cornerstone of the Company's future growth. The Company maintains a
         testing laboratory where its engineers experiment with new connector
         designs based on changes in technology and in an attempt to create
         innovative, more efficient connector designs.

         The Company expended $21,000 and $31,000 for the years ended March 31,
         2006 and March 25, 2005, respectively, on Company sponsored research
         and development activities relating to the development of new designs,
         techniques and the improvement of existing designs. In addition, the
         Company received $21,000 in revenues for the year ended March 31, 2006
         and $31,000 for the year ended March 25, 2005, respectively, pursuant
         to customer sponsored research activities.

         Employees

         The Company presently employs approximately 83 people, two (2) of whom
         are executive officers; four (4) are engaged in management activities;
         five (5) provide general and administrative services and approximately
         72 are employed in manufacturing and testing activities. The employees
         engaged in manufacturing and testing activities are covered by a
         collective bargaining agreement with the United Auto Workers of
         America, Local 259 (the "Union"), which expires on March 31, 2006 and
         was renegotiated and extended until March 31, 2009. The Company
         believes that it has a good relationship with its employees and the
         Union.

         Patents and Licenses

         Electrical connectors and interconnection devices are usually the
         subject of standard designs; therefore, only innovations of standards
         designs or the discovery of a new form of connector are patentable. The
         Company is continuously attempting to develop new forms of connectors
         or adaptations of current connector designs in an attempt to increase
         performance and decrease per unit costs. The Company has developed and
         designed the COMTAC connector, which was patented on January 19, 1988,
         at which time the patent was assigned to the Company.


                                      -6-
<PAGE>

                                 IEH CORPORATION

                                     PART I

Item 1.  Business (continued)

         Governmental Regulations

         The Company is subject to federal regulations under the Occupational
         Safety and Health Act ("OSHA") and the Defense Electrical Supply
         Command ("DESC"). OSHA provides federal guidelines and specifications
         to companies in order to insure the health and safety of employees.
         DESC oversees the quality and specifications of products and components
         manufactured and sold to the government and the defense industry.
         Although DESC continuously requires suppliers to meet changing
         specifications, the Company has not encountered any significant
         problems meeting such specifications and its products have, in the
         past, been approved. The Company is unaware of any changes in the
         government's regulations, which are expected to materially affect the
         Company's business.

Item 2.  Properties

         The Company exercised its option to renew its lease on its facility for
         10 years. The original lease was effective through August 23, 2001.

         The Company is obligated under this renewal lease through August 23,
         2011, at minimum annual rentals as follows:

         Fiscal year ending March:

         2007               $ 112,765
         2008                 112,765
         2009                 112,765
         2010                 112,765
         2011                  75,177
                            ---------

                            $ 526,237
                            =========

         The Company leases approximately 20,400 feet of space, of which it
         estimates; 6,000 square feet are used as executive, sales and
         administrative offices and 14,400 square feet are used for its plating
         and manufacturing operations.

         The rental expense for the year ended March 31, 2006 and March 25, 2005
         was $136,325 and $169,765, respectively. Rental expense for the years
         ended March 31, 2006 and March 25, 2005 included a surcharge of $23,560
         and $57,210 respectively. In addition to the base rent, the Company
         pays real estate taxes, insurance premiums and utility charges relating
         to the use of the premises. The Company considers its present
         facilities to be adequate for its present and anticipated future needs

Item 3.  Legal Proceedings

         The Company is not a party to or aware of any pending or threatened
         legal proceedings which would result in any material adverse effect on
         its operations or its financial condition.

                                      -7-
<PAGE>


                                 IEH CORPORATION

                                     PART II

Item 4.   Submission of Matters to Vote of Security Holders

         No matters were submitted to shareholders during the fourth quarter for
         the fiscal year ended March 31, 2006. We expect to have our annual
         meeting for 2006 sometime in the late second fiscal quarter or early
         third fiscal quarter.

Item 5.   Market for Common Equity and Related Stockholder Matters

         Principal Market

         The common stock of the Company (the "common stock") is traded in the
         Over-The-Counter Market and is quoted on the National Association of
         Securities Dealers Automated Quotation ("NASDAQ") System Bulletin Board
         under the symbol "IEHCE.OB"). On January 11, 1993, the Company's common
         stock was deleted from listing on the NASDAQ SmallCap Market System
         because of the Company's failure to maintain the minimum asset and
         shareholders equity requirements. On January 12, 1993, the Company's
         common stock was first quoted over the Electronic Bulletin Board
         (OTCBB).

         Market Information

         The range of high and low bid prices for the Company's common stock,
         for the periods indicated as set forth below. For the period to October
         29, 1991, the Company was listed on the NASDAQ National Market System.
         On October 29, 1991, the Company's common stock was delisted from the
         NASDAQ National Market System and from October 29, 1991 to January 11,
         1993, the Company's common stock was listed on the NASDAQ SmallCap
         Market System. On January 11, 1993, the Company's common stock was
         delisted from the NASDAQ SmallCap Market System and on January 13,
         1993, the Company's common stock was first quoted over the Electronic
         Bulletin Board (OTCBB). Set forth below is a table indicating the high
         and low bid prices of the common stock during the periods indicated.

                               Year                      High Bid      Low Bid

         Fiscal Year ended March 31, 2006

         1st Quarter                                          .90          .34
         2nd Quarter                                         3.13          .58
         3rd Quarter                                         4.75         1.55
         4th Quarter                                         2.70         2.00

         Fiscal Year ended March 25, 2005  (1)

         1st Quarter                                          .50          .50
         2nd Quarter                                          .29          .29
         3rd Quarter                                          .39          .39
         4th Quarter                                          .51          .51


         (*) As reported by the OTCBB.


                                      -8-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters (continued)

         The above quotations, as reported, represent prices between dealers and
         do not include retail mark-ups, mark-downs or commissions. Such
         quotations do not necessarily represent actual transactions.

         On June 29, 2006, the high bid for the common stock was $2.24 and the
         low bid was $2.24 . Trading in our securities does not occur on a daily
         basis.

         Dividends

         The Company has not paid any cash dividends on its common stock during
         the last five (5) fiscal years. At present, the Company does not
         anticipate issuing any cash dividends on its common stock in the
         foreseeable future by reason of its contemplated future financial
         requirements and business plans. The Company will retain earnings, to
         the extent that there are any, to finance the development of its
         business.

         Approximated Number of Equity Security Holders

         The number of record holders of the Company's common stock as of June
         30, 2006 was approximately 602. Such number of record owners was
         determined from the Company's stockholder records, and does not include
         the beneficial owners of the Company's common stock whose shares are
         held in the names of various security holders, dealers and clearing
         agencies.


Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

         Statements contained in this report, which are not historical facts may
         be considered forward looking information with respect to plans,
         projections, or future performance of the Company as defined under the
         Private Securities litigation Reform Act of 1995. These forward-looking
         statements are subject to risks and uncertainties, which could cause
         actual results to differ materially form those projected. The words
         "anticipate," "believe", "estimate", "expect," "objective," and "think"
         or similar expressions used herein are intended to identify
         forward-looking statements. The forward-looking statements are based on
         the Company's current views and assumptions and involve risks and
         uncertainties that include, among other things, the effects of the
         Company's business, actions of competitors, changes in laws and
         regulations, including accounting standards, employee relations,
         customer demand, prices of purchased raw material and parts, domestic
         economic conditions, including housing starts and changes in consumer
         disposable income, and foreign economic conditions, including currency
         rate fluctuations. Some or all of the facts are beyond the Company's
         control.

         The following discussion and analysis should be read in conjunction
         with the financial statements and related footnotes, which provide
         additional information concerning the Company's financial activities
         and condition.

         Critical Accounting Policies

         The Financial Statements have been prepared in accordance with
         accounting principles generally accepted in the United States of
         America, which require the Company to make estimates and assumptions
         that affect the reported amounts of assets and liabilities at the date
         of the Financial

                                      -9-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

         Critical Accounting Policies (continued)

         Statements, and revenues and expenses during the periods reported.
         Actual results could differ from those estimates. The Company believes
         the following are the critical accounting policies, which could have
         the most significant effect on the Company's reported results and
         require the most difficult, subjective or complex judgments by
         management.

         o        Impairment of Long-Lived Assets:
                  The Company reviews its long-lived assets for impairment
                  whenever events or circumstances indicate that the carrying
                  amount of an asset may not be recoverable. If the sum of the
                  expected cash flows, undiscounted and without interest, is
                  less than the carrying amount of the asset, an impairment loss
                  is recognized as the amount by which the carrying amount of
                  the asset exceeds its fair value. The Company makes estimates
                  of its future cash flows related to assets subject to
                  impairment review.

         o        Inventory Valuation:
                  Raw materials and supplies are valued at the lower of
                  first-in, first-out cost or market. Finished goods and work in
                  process are valued at the lower of actual cost, determined on
                  a specific identification basis, or market. The Company
                  estimates which materials may be obsolete and which products
                  in work in process or finished goods may be sold at less than
                  cost, and adjusts their inventory value accordingly. Future
                  periods could include either income or expense items if
                  estimates change and for differences between the estimated and
                  actual amount realized from the sale of inventory.

         o        Income Taxes:
                  The Company records a liability for potential tax assessments
                  based on its estimate of the potential exposure. Due to the
                  subjectivity and complex nature of the underlying issues,
                  actual payments or assessments may differ from estimates.
                  Income tax expense in future periods could be adjusted for the
                  difference between actual payments and the Company's recorded
                  liability based on its assessments and estimates.

         o        Revenue Recognition:
                  Revenues are recognized at the shipping date of the Company's
                  products. The Company has historically adopted the shipping
                  terms that title merchandise passes to the customer at the
                  shipping point (FOB Shipping Point). At this juncture, title
                  has passed, the Company has recognized the sale, inventory has
                  been relieved, and the customer has been invoiced. The Company
                  does not offer any discounts, credits or other sales
                  incentives.

                  The Company's policy with respect to customer returns and
                  allowances as well as product warranty is as follows:

                  The Company will accept a return of defective product within
                  one year from shipment for repair or replacement at the
                  Company's option. If the product is repairable, the Company at
                  its own cost will repair and return it to the customer. If
                  unrepairable, the Company will either offer an allowance
                  against payment or will reimburse the customer for the total
                  cost of the product.

                                      -10-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

                  Critical Accounting Policies (Continued)

                  Most of the Company's products are custom ordered by customers
                  for a specific use. The Company provides engineering services
                  as part of the relationship with its customers in developing
                  the custom product. The Company is not obligated to provide
                  such engineering service to its customers. The Company does
                  not charge separately for these services.

         o        Research & Development:
                  The Company provides personalized engineering services to its
                  customers by designing connectors for specific customer
                  applications. The employment of electromechanical engineers is
                  the anticipated cornerstone of the Company's future growth.
                  The Company maintains a testing laboratory where its engineers
                  experiment with new connector designs based on changes in
                  technology and in an attempt to create innovative, more
                  efficient connector designs.

                  The Company expended $21,000 and $31,000 for the years ended
                  March 31, 2006 and March 25, 2005, respectively, on Company
                  sponsored research and development activities relating to the
                  development of new designs, techniques and the improvement of
                  existing designs. In addition, the Company received $21,000 in
                  revenues for the year ended March 31, 2006 and $31,000 for the
                  year ended March 25, 2005, respectively, pursuant to customer
                  sponsored research activities.



                                      -11-
<PAGE>


                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (Continued)

         Results of Operations

         The following table sets forth for the periods indicated, percentages
         for certain items reflected in the financial data as such items bear to
         the revenues of the Company:

                         Relationship to Total Revenues
                                                           March 31,   March 25,
                                                             2006        2005
                                                           --------    --------

         Operating Revenues (in thousands)                 $  7,588    $  5,321
                                                           --------    --------

         Operating Expenses:
           (as a percentage of Operating Revenues)

                     Costs of Products Sold                    64.0%       71.8%
                     Selling, General and Administrative       16.5%       19.3%
                     Interest Expense                           1.2%        2.0%
                     Depreciation and amortization              2.7%        3.3%
                                                           --------    --------

                            TOTAL COSTS AND EXPENSES           84.4%       96.4%
                                                           --------    --------

         Operating Income (loss)                               15.6%        3.6%

         Other Income                                            --          --
                                                           --------    --------

         Income (loss) before Income Taxes                     15.6%        3.6%

         Income Taxes                                            .6%         .5%
                                                           --------    --------

         Net Income (loss)                                     15.0%        3.1%
                                                           ========    ========

         Year End Results: March 31, 2006 vs. March 25, 2005

         Operating revenues for the year ended March 31, 2006 amounted to
         $7,588,253 reflecting an 42.6% increase versus the year ended March 25,
         2005 revenues of $5,321,269. The increase in revenues is a direct
         result of an increase in commercial sales.

         The Company is primarily a manufacturer and its products are
         essentially basic components of larger assemblies of finished goods.
         Approximately 91% and 92% of the Company's net sales for the fiscal
         year ended March 31, 2006 and March 25, 2005, respectively, were made
         directly to manufacturers of finished products with the balance of the
         Company's products sold to distributors. Distributors often

                                      -12-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (Continued)

         Results of Operations (continued)

         Year End Results: March 31, 2006 vs. March 25, 2005

         purchase connectors for customers who do not require large quantities
         of connectors over a short period of time but rather require small
         allotments of connectors over an extended period of time.

         For the fiscal year ended March 31, 2006, one of the Company's
         customers accounted for approximately 19% of total sales. The same
         customer accounted for approximately 34% of sales in the fiscal year
         ended March 25, 2005.

         The Company currently employs 14 independent sales representatives to
         market its products in all regions of the United States. These sales
         representatives accounted for approximately 94% of the Company's sales,
         with the balance of sales being generated by direct customer contact.

         For the fiscal year ended March 31, 2006, the Company's principal
         customers included manufacturers of commercial electronic products,
         defense contractors and distributors who service these markets. Sales
         to the commercial electronic and government markets comprised 26% and
         73% of the Company's net sales for the year ended March 31, 2006 and
         22% and 77% for the year ended March 25, 2005 respectively.
         Approximately 1% of net sales were made to international customers.

         Cost of products sold amounted to $4,856,281 for the fiscal year ended
         March 31, 2006, or 64% of operating revenues. This reflected a
         $1,037,047 or 27.2% increase in the cost of products sold from
         $3,819,234 or 71.8% of operating revenues for the fiscal year ended
         March 25, 2005. This increase is due primarily to the increased cost of
         production associated with the sales increase.

         Selling, general and administrative expenses were $1,253,458 and
         $1,027,222 or 16.5% and 19.3% of operating revenues for the fiscal
         years ended March 31, 2006 and March 25, 2005, respectively. This
         category of expense increased by $226,236 or 22.0% from the prior year.
         The increase can be attributed to an increase in sales salaries,
         commissions and travel.

         Interest expense was $90,616 for the fiscal year ended March 31, 2006
         or 1.2% of operating revenues. For the fiscal year ended March 25,
         2005, interest expense was $104,185 or 2.0% of operating revenues. The
         decrease of $13,569 or 13.0% reflects the liquidation of a significant
         amount of the Company's debt.

         Depreciation and amortization of $204,253 or 2.7% of operating revenues
         was reported for the fiscal year ended March 31, 2006. This reflects an
         increase of $26,749 from the prior year ended March 25, 2005 of
         $177,504 or 3.3% of operating revenues. The increase is due primarily
         to an increase in capital assets being purchased over the current
         fiscal year.

         The Company reported net income of $1,137,622 for the year ended March
         31, 2006 representing basic earnings of $.49 per share as compared to
         net income of $166,484 or $.07 per share for the year ended March 25,
         2005. The increase in net income for the current year can be attributed
         primarily to the reported increase in commercial sales.

                                      -13-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

         Liquidity and Capital Resources

         The Company reported working capital of $1,083,444 as of March 31, 2006
         compared to a working capital deficit of $1,283 as of March 25, 2005.
         The increase in working capital of $1,082,161 was attributable to the
         following items:

                   Net income                              $ 1,137,622
                   Depreciation and amortization               204,253
                   Capital expenditures                       (231,963)
                   Other transactions                          (27,751)

         As a result of the above, the current ratio (current assets to current
         liabilities) was 1.8 to 1.0 at March 31, 2006 as compared to 1.0 to 1.0
         at March 25, 2005. Current liabilities at March 31, 2006 were
         $1,392,060 compared to $2,026,588 at March 25, 2005.

         The Company reported $231,963 in capital expenditures for the year
         ended March 31, 2006 and reported depreciation of $204,253 for the year
         ended March 31, 2006.

         The net income of $1,137,622 for the year ended March 31, 2006 resulted
         in an increase in stockholders' equity to $2,283,327 as compared to
         stockholders' equity of $1,145,705 at March 25, 2005.

         The Company has an accounts receivable financing agreement with a
         factor, which bears interest at 2.5% above prime with a minimum of 12%
         per annum. At March 31, 2006, the amount outstanding with the factor
         was $269,099 as compared to $643,472 at March 25, 2005. The loan is
         secured by the Company's accounts receivables and inventories. The
         factor provides discounted funds based upon the Company's accounts
         receivables, these funds provide the primary source of working capital
         for operations.

         In the past two fiscal years, management has been reviewing its
         collection practices and policies for outstanding receivables and has
         revised its collection procedures to a more aggressive collection
         policy. As a consequence of this new policy the Company's experience is
         that its customers have been remitting payments on a more consistent
         and timely basis. The Company reviews the collectability of all
         accounts receivable on a monthly basis. The reserve is less than 2% of
         average gross accounts receivable and is considered to be
         conservatively adequate.

         During the year ended March 26, 2004, two of the Company's officers
         loaned the Company a total of $52,000 on a non-interest bearing basis.
         The Company used these funds as a source of additional working capital.

         During the year ended March 25, 2005, one of these officers loaned the
         Company an additional $135,744 on a non-interest bearing basis as well.
         These funds were also used by the Company for working capital
         requirements. Through the period ended March 31, 2006, the Company had
         repaid $108,744 of the total funds loaned to it.

         As of March 31, 2006, the amount owed to these officers was $79,000.

                                      -14-
<PAGE>

                                 IEH CORPORATION

                                     PART II

Item 6.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

         Liquidity and Capital Resources (continued)

         The Company has a collective bargaining Multi-Employer Plan with the
         United Auto Workers of America, Local 259. Contributions are made in
         accordance with a negotiated labor contract and are based on the number
         of covered employees employed per month. With the passage of the Act,
         the Company may become subject to liabilities in excess of
         contributions made under the collective bargaining agreement.
         Generally, these liabilities are contingent upon the termination,
         withdrawal, or partial withdrawal from the Multi-Employer Plan. The
         Company has not taken any action to terminate, withdraw or partially
         withdraw from the Multi-Employer Plan nor does it intend to do so in
         the future. Under the Act, liabilities would be based upon the
         Company's proportional share of such Plan's unfunded vested benefits,
         which is currently not available. The amount of accumulated benefits
         and net assets of such Plan also is not currently available to the
         Company. The total contributions charged to operations under the
         Multi-Employer Plan were $62,771 for the year ended March 31, 2006 and
         $54,643 for the year ended March 25, 2005.

         On June 30, 1995, the Company applied to the PBGC to have the PBGC
         assume all of the Company's responsibilities and liabilities under its
         Salaried Pension Plan. On April 26, 1996, the PBGC determined that the
         Salaried Pension Plan did not have sufficient assets available to pay
         benefits, which were and are currently due under the terms of the
         Salaried Pension Plan.

         The PBGC further determined that pursuant to the provisions of ERISA
         that the Salaried Pension Plan must be terminated in order to protect
         the interests of the Plan's participants. Accordingly, the PBGC
         proceeded pursuant to ERISA to have the Salaried Pension Plan
         terminated and the PBGC appointed as statutory trustee, and to have
         July 31, 1995 established as the Plan's termination date.

         The Company and the PBGC agreed to the terms of a settlement of the
         matter. The agreement is effective July 2, 2001. Under the agreement,
         the Company and the PBGC agreed on a total sum of $244,000. The Company
         has agreed to make payments as follows:

         September 1, 2003 to August 1, 2004               $2,000 per month
         September 1, 2004 to August 1, 2006               $3,000 per month
         September 1, 2006 to August 1, 2007               $4,000 per month

         Additionally, the Company has made balloon payments of $25,000 each on
         January 1, 2004, May 1, 2004, May 1, 2005 and January 1, 2006.

         The Company also granted the PBGC a lien on the Company's machinery and
         equipment.

         As a result of this agreement the amount due the PBGC was restated to
         $244,000. $86,000 was paid during the year ended March 31, 2006,
         $56,000 was paid during the year ended March 25, 2005 and $39,000 was
         paid during the year ended March 26, 2004. The remaining balance of
         $63,000 is reported as follows: $43,000 as a current liability and
         $20,000 as a long-term liability on the accompanying financial
         statements.

                                      -15-
<PAGE>

                                 IEH CORPORATION

                                     PART II


Item 6.  Management's Discussion And Analysis Of Financial Conditions And
         Results Of Operations (continued)

         Liquidity and Capital Resources (continued)

         On September 21, 2001 the Company's shareholders approved the adoption
         of the Company's 2002 Employees Stock Option Plan to provide for the
         grant of options to purchase up to 750,000 shares of the Company's
         common stock to all employees, including senior management. No options
         have been granted under the 2002 Employees Stock Option Plan to date.

         Options granted to employees under this plan may be designated as
         options which qualify for incentive stock option treatment under
         Section 422A of the Internal Revenue Code, or options which do not so
         qualify. Under this plan, the exercise price of an option designated as
         an Incentive Stock Option shall not be less than the fair market value
         of the Company's common stock on the day the option is granted.

         In the event an option designated as an incentive stock option is
         granted to a ten percent (10%) share holder, such exercise price shall
         be at least 110 percent (110%) of the fair market value or the
         Company's common stock and the option must not be exercisable after the
         expiration of five years from the day of the grant. Exercise prices of
         non-incentive stock options may be less than the fair market value of
         the Company's common stock. The aggregate fair market value of shares
         subject to options granted to its participants, which are designated as
         incentive stock options, and which become exercisable in any calendar
         year, shall not exceed $100,000. As of March 31, 2006, no options had
         been granted under such Plan.

         In 1987, the Company adopted a cash bonus plan ("Cash Bonus Plan") for
         Executive Officers. Contributions to the Cash Bonus Plan are made by
         the Company only after pre-tax operating profits exceed $150,000 for a
         fiscal year, and then to the extent of 10% of the excess of the greater
         of $150,000 or 25% of pre-tax operating profits. For the year ended
         March 31, 2006 the contribution was $75,500. For the year ended March
         25, 2005 the contribution was $4,188.

         Effects of Inflation

         The Company does not view the effects of inflation to have a material
         effect upon its business. Increases in costs of raw materials and labor
         costs have been offset by increases in the price of the Company's
         products, as well as reductions in costs of production, reflecting
         management's efforts in this area. While the Company has in the past
         increased its prices to customers, it has maintained its relatively
         competitive price position. However, significant decreases in
         government and defense subcontractor spending, has provided excess
         production capacity in the industry, which in turn has tightened
         pricing margins.

         Off Balance Sheet Arrangements

         The Company does not have any off balance sheet arrangements within the
         meaning of Item 303 of Regulation S-B.

                                      -16-
<PAGE>

                                 IEH CORPORATION

                                     PART II
Item 7.   Financial Statements

         See Index to Financial Statements attached hereto appearing at pages 25
         to 43.

Item 8.  Controls and Procedures

         Evaluation of Disclosure Controls and Procedures:

         Our management, under the supervision and with the participation of our
         Chief Executive Officer and Controller, conducted an evaluation of our
         "disclosure controls and procedures" (as defined in the Securities
         Exchange Act of 1934 Rules 13a-14(c)) within 90 days of the filing date
         of this Report on Form 10-KSB ("Evaluation Date"). Based on their
         evaluation, our Chief Executive Officer and Controller have concluded
         that as of the end of the period covered by this Form 10-KSB, our
         disclosure controls and procedures are effective to ensure that all
         material information required to be filed in this Report on Form 10-KSB
         has been made known to them. Our Chief Financial Officer and Controller
         is our principal accounting officer.

         There have been no changes, including corrective actions with regard to
         significant deficiencies or material weaknesses in our internal
         controls or in other factors that have materially affected or could
         significantly or materially affect these controls subsequent to the
         Evaluation Date set forth above. In addition, historically, the Company
         has relied upon the entire Board of Directors in appointing the
         Company's independent auditors and reviewing the financial condition
         and statements of the Company. Given the relatively small size of the
         Company's operations and revenues, the Board has not believed that
         appointing an independent committee was a necessity.

         Additionally, in response to the passage of the Sarbanes-Oxley Act of
         2002, our Board of Directors and management have adopted a Code of
         Ethics and have instituted a periodic review by members of our
         management team to assist and guide the disclosure process. The Board
         has also determined to periodically review and develop policies and
         procedures to enhance our disclosure controls and procedures as well as
         with reviewing our periodic reports and other public disclosures.


                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16 (a) of the Exchange Act

         The executive officers and directors of the Company are as follows:

                   Name           Age                    Office

         Michael Offerman          65        Chairman of the Board of Directors
                                             and President

         Robert Knoth              64        Secretary and Treasurer

         Murray Sennet             83        Director

         Allen Gottlieb            65        Director


                                      -17-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16 (a) of the Exchange Act (continued)

         All directors serve for a term of two years and until their successors
         are duly elected. All officers serve at the discretion of the Board of
         Directors.

         Executive Officers and Directors

         Michael Offerman has been a member of the Board of Directors since
         1973. In May 1987, Mr. Offerman was elected President of the Company
         and has held that position since that date. Prior to his becoming
         President, Mr. Offerman served as Executive Vice-President of the
         Company.

         Robert Knoth joined the Company as Controller in January 1990 and was
         elected Treasurer of the Company in March 1990. Mr. Knoth was elected
         as Secretary of the Company in September 1992 and Mr. Knoth has held
         these positions since said dates. From 1986 to January 1990, Mr. Knoth
         was employed as controller by G&R Preuss, Inc., a company engaged in
         the business of manufacturing truck bodies and accessories.

         Murray Sennet has been a member of the Company's Board of Directors
         since 1970. Mr. Sennet was the Secretary and the Treasurer of the
         Company at the time of his retirement in April 1986.

         Allen Gottlieb has been a member of the Company's Board of Directors
         since 1992. Mr. Gottlieb has been an attorney in private practice for
         over five (5) years.

         Significant Employees

         Joan Prideaux joined the Company in April 1994, as Director of Sales
         and Marketing. Joan has been in the connector business over 30 years
         and brings this experience to IEH. Prior to joining us, she was
         employed by Automatic Connector as Director of Sales.

         Mark Iskin is the Director of Purchasing, a position he has held since
         September 2000. Prior to joining the Company, Mr. Iskin worked as a
         materials and purchasing specialist, in manufacturing and distribution
         companies. In his last position with an industrial distributor, Mr.
         Iskin was responsible for purchasing and managing vendors for the
         cutting tool section of the catalog. In addition he participated in
         setting up and developing the company's forecasting/planning software
         related to that department procedures.

         David Offerman joined IEH in September 2004 as the National Sales
         Manager. Prior to joining IEH, David worked as an account executive and
         sales manager in the telecommunication industry.

         Robert Romeo serves as Vice President of Engineering for IEH; a post he
         has held since October 2005. Robert has corporate responsibility for
         engineering products and driving product enhancements to satisfy the
         demanding application requirements of IEH customers. In addition,
         Robert is tasked with engineering new product developments in the IEH
         connector offerings to broaden the market base of potential customers.
         These new connectors will introduce the traditional IEH quality and
         value to industries that specify exceptional reliability and
         performance in electrical and electronic equipment.

                                      -18-
<PAGE>

                                 IEH CORPORATION

                                    PART III


Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16 (a) of the Exchange Act (continued)

         Significant Employees (continued)

         Before joining IEH, Robert worked for more than twenty years in
         positions of increasing responsibility for major national manufacturers
         of electrical and electronic goods for residential, industrial,
         government and OEM markets.

         Paul Tzetzos joined IEH in November, 2005 as a Quality Assurance
         Director. Paul has over 20 years of experience in the field of Quality
         Assurance; with the last 15 years as Director/Manager. A degreed
         Engineer; with diversified knowledge in developing, implementing,
         maintaining, and improving Quality Systems, such as, ISO 9001:2000,
         EECS, MIL-Q-9858A, ETC. A certified Lead and Internal Auditor, Paul has
         a great deal of knowledge concerning military and industry
         specifications and standards.

         Certain Reports

         Section 16(a) of the Securities Exchange Act of 1934 requires the
         Company's directors and officers and persons who own, directly or
         indirectly, more than 10% of a registered class of the Corporation's
         equity securities, to file with the Securities and Exchange Commission
         ("SEC") reports of ownership and reports of changes in ownership of
         Common Stock of the Corporation.

         Officers, directors and greater than 10% shareholders are required to
         furnish the Company with copies of all Section 16(a) reports that they
         file. Based solely on review of the copies of such reports received by
         the Company, the Company believes that filing requirements applicable
         to officers, directors and 10% shareholders were complied with during
         the fiscal year ended March 31, 2006.

Item 10. Executive Compensation

         The following table sets forth below the summary compensation paid or
         accrued by the Company during the fiscal years ended March 31, 2006,
         March 25, 2005, and March 26, 2004 for the Company's Chief Executive
         Officer:

<TABLE>
<CAPTION>
                                                                                   Other Annual
Name and Principal Position                  Year           Salary       Bonus     Compensation
---------------------------------       --------------     ---------    -------    ------------
<S>                                          <C>          <C>           <C>             <C>
Michael Offerman, Chief Executive
Officer, President (1)                  March 31, 2006     $ 100,000     24,000          0
                                        March 25, 2005        96,235      1,424          0
                                        March 26, 2004        95,500         --          0
</TABLE>

         (1)      During the years ended March 31, 2006, March 25, 2005 and
                  March 26, 2004, the Company provided automobile allowances to
                  Mr. Offerman. This does not include the aggregate incremental
                  cost to the Company of such automobile allowance.

         (2)      There are no employment agreements between the Company and
                  members of its senior management, including the Chief
                  Executive Officer, Michael Offerman.

                                      -19-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 10. Executive Compensation (continued)

         No other officer of the Company received compensation (salary and
         bonus) in excess of $100,000 during the fiscal years ended March 31,
         2006, March 25, 2005 or March 26, 2004.

         Pension/Benefit Incentive Plan
         In 1964, the Company's Shareholders and Board of Directors adopted the
         Salaried Pension Plan effective April 1, 1964, for salaried employees
         of the Company. The Salaried Pension Plan as revised on April 1, 1987,
         provides for retirement benefits for qualified employees upon or prior
         to retirement.

         For early retirement, employees are eligible to receive a portion of
         their retirement benefits, starting 10 years prior to the employees
         anticipated normal retirement age (age 65), if the employee has
         completed 15 years of service to the Company. The employee is eligible
         to receive reduced retirement benefits based on an actuarial table for
         a period not exceeding ten (10) years of his lifetime. In no event
         would benefits exceed $12,000 per year.

         For normal retirement at the age of sixty-five (65) the employee is
         entitled to receive full retirement benefits for a period not exceeding
         ten (10) years of his lifetime. If the employee should die prior to the
         ten-year period, his beneficiaries will continue to receive the full
         benefit for the remainder of the ten-year term. In no event will
         benefits exceed $12,000 per year.

         If payment is made on the "joint and survivor basis" as elected by the
         employee, benefits will be provided to both the employee and spouse on
         a reduced basis over the life of both the employee and his spouse. If
         the employee should die prior to the guaranteed ten-year period, the
         spouse will receive the employee benefit for the remainder of the term,
         after which, the spouse will received the reduced spousal benefit for
         the life of the spouse. In no event will the benefits pursuant to the
         joint and survivor basis exceed $12,000 per year.

         On June 30, 1995, the Company applied to the PBGC") to have the PBGC
         assume all of the Company's responsibilities and liabilities under its
         Salaried Pension Plan. On April 26, 1996, the PBGC determined that the
         Salaried Pension Plan did not have sufficient assets available to pay
         benefits, which were and are currently due under the terms of the Plan.

         The PBGC further determined that pursuant to the provisions of ERISA,
         that the Plan must be terminated in order to protect the interests of
         the Plan's participants. Accordingly, the PBGC proceeded pursuant to
         ERISA to have the Plan terminated and the PBGC appointed as statutory
         trustee, and to have July 31, 1995 established as the Plan's
         termination date.

         The Company and the PBGC negotiated a settlement on the entire matter
         and on July 2, 2001, an agreement was reached whereby the Company's
         liability to the PBGC was reduced to $244,000. The Company will make
         monthly payments to the PBGC as follows:

           September 1, 2003 to August 1, 2004             $2,000 per month
           September 1, 2004 to August 1, 2006             $3,000 per month
           September 1, 2006 to August 1, 2007             $4,000 per month

                                      -20-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 10. Executive Compensation (continued)

         Pension/Benefit Incentive Plan (continued)

         Additionally, the Company has made balloon payments of $25,000 each on
         January 1, 2004, May 1, 2004, May 1, 2005 and January 1, 2006.

         The Company also granted the PBGC a lien on the Company's machinery and
         equipment.

         As a result of this agreement the amount due the PBGC was restated to
         $244,000. $86,000 was paid during the year ended March 31, 2006,
         $56,000 was paid during the year ended March 25, 2005 and $39,000 was
         paid during the year ended March 26, 2004. The remaining balance of
         $63,000 is reported as follows: $43,000 as a current liability and
         $20,000 as a long-term liability on the accompanying financial
         statements.

         Cash Bonus Plan

         In 1987, the Company adopted a cash bonus plan ("Cash Bonus Plan") for
         Executive Officers. Contributions to the Cash Bonus Plan are made by
         the Company only after pre-tax operating profits exceed $150,000 for a
         fiscal year, and then to the extent of 10% of the excess of the greater
         of $150,000 of 25% of pre-tax operating profits. For the year ended
         March 31, 2006 the contribution was $75,500. The contribution for the
         year ended March 25, 2005 was $4,188.

Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth certain information as of July 14, 2006
         with respect to (i) the persons (including any "group" as that term is
         used in Section 13(d)(3) of the Securities Exchange Act of 1934), known
         by the Company to be the beneficial owner of more than five percent
         (5%) of any class of the Company's voting securities; (ii) each
         Executive Officer and Director who owns Common Stock in the Company;
         and (iii) all Executive Officers and Directors as a group. As of July
         14, 2006, there were 2,303,468 shares of Common Stock issued and
         outstanding.

                                      -21-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 11. Security Ownership of Certain Benenficial Owners and Management
         (continued)

<TABLE>
<CAPTION>
                                                     Amount of
                                                     and Nature of
                      Name and Address of            Beneficial
Title of Class        Beneficial Owner               Ownership        Percentage of Class
---------------       ----------------------         -------------    -------------------
<S>                   <C>                                 <C>                  <C>
Common Stock          Michael Offerman                   923,784              40%
$.01 Par Value        140 58th Street
                      Brooklyn, NY 11220(1)

                      Murray Sennet                       24,500             1.1%
                      1900 Manor Lane
                      Plano, TX 75093

                      Allen Gottlieb                           0               0
                      325 Coral Way
                      Ft. Lauderdale, FL 33301

                      Robert Pittman (2)                  20,000               *
                      45 Ocean Avenue
                      Monmouth Beach
                      NJ 07750

                      Robert Knoth                           400               *
                      140 58th Street
                      Brooklyn, NY  11220

All Officers & Directors as a Group
(5 in number)                                            968,684              42%
</TABLE>
----------------------
         *  Less than 1%.

1.       43,600 shares of Common Stock are jointly owned by Mr. Offerman and his
         wife, Gail Offerman.

2.       Mr. Pittman is now deceased and the shares are owned by his estate.

All shares set forth above are owned directly by the named individual unless
otherwise stated.

Item 12.   Certain Relationships and Related Transactions

         Other than the employment terms for its executive officers as described
elsewhere in this Form 10-KSB, and as described below, there have been no
related transactions between the Company, officers, directors or shareholders
holding in excess of 5% of its securities within the last three years.


                                      -22-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 12. Certain Relationships and Related Transactions (continued)

         During the year ended March 26, 2004, two of the Company's officers,
         (Michael Offerman, the Chief Executive Officer and Robert Knoth, the
         Chief Financial Officer, Controller and the Principal Accounting
         Officer) loaned the Company a total of $52,000 on a non-interest
         bearing basis. The Company used these funds as a source of additional
         working capital.

         During the year ended March 25, 2005, Mr. Robert Knoth loaned the
         Company an additional $135,744 on a non-interest bearing basis as well.
         These funds were also used by the Company for working capital
         requirements. Through the period ended March 31, 2006, the Company had
         repaid $108,744 of the total funds loaned to it. As of March 31, 2006,
         the aggregate amount owed to these officers was $79,000 of the total
         funds loaned to it.

Item 13. Exhibits

         Exhibits filed with Form 10-KBS:

         31.1 Certification of Principal Executive Officer pursuant to Section17
         CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).

         31.2 Certification of Principal Accounting Officer pursuant to
         Section17 CFR 240.13a-14(a) or 17 CFR 240.15d-14(a).

         32.1 Certification by Michael Offerman, President, pursuant to 17 CFR
         240.13a-14(b) or 17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of
         Title 18 of the United States Code.

         32.2 Certification by Robert Knoth, Chief Financial Officer, Controller
         and Principal Accounting Officer, pursuant to 17 CFR 240.13a-14(b) or
         17 CFR 240.15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the
         United States Code.

Item 14. Principal Accountant Fees and Services

         The Board of Directors of IEH has selected Jerome Rosenberg, Certified
         Public Accountant, P.C. as the independent auditor of IEH for the
         fiscal year ending March 31, 2006. Shareholders are not asked to
         approve such selection because such approval is not required. The audit
         services provided by Jerome Rosenberg, CPA P.C. consist of examination
         of financial statements, services relative to filings with the
         Securities and Exchange Commission, and consultation in regard to
         various accounting matters. A member of the firm is expected to be
         present at the next meeting of shareholders, will have the opportunity
         to make a statement if he so desires, and will be available to respond
         to appropriate questions.

         Audit Fees. During the fiscal year ended March 31, 2006 and March 25,
         2005, IEH paid an aggregate of $30,000 and $27,000, respectfully, to
         Jerome Rosenberg, CPA P.C. for fees related to the audit of its
         financial statements.

         Audit Related Fees. During the fiscal years ended March 31, 2006 and
         March 25, 2005 no fees were paid to Jerome Rosenberg, CPA P.C. with
         respect to financial systems design or implementation.

                                      -23-
<PAGE>

                                 IEH CORPORATION

                                    PART III

Item 14. Principal Accountant Fees and Services (Continued)

         Tax Fees. During the fiscal years ended March 31, 2006 and March 25,
         2005, the Company paid to Jerome Rosenberg CPA P.C. the sums of $3,000
         and $3,000 for tax compliance, tax advice and tax planning services.

         All Other Fees. During the fiscal year ended March 31, 2006, IEH did
         not pay any other fees for services to its auditor.

                  The Board of Directors has determined that the services
         provided by Jerome Rosenberg, CPA P.C. and the fees paid to it for such
         services during the fiscal year ended March 31, 2006 has not
         compromised the independence of Jerome Rosenberg, CPA P.C.

                  The Board of Directors of the Company is comprised of three
         persons. Due to the limited size and scope of the Company's operations
         which are limited to one office and the level of revenue and income,
         the Board of Directors has not established an Audit Committee. Further,
         as the Company's securities are not traded on any exchange or on
         Nasdaq, but solely are listed for quotations on the Over the Counter
         Bulletin Board, there is no requirement that an Audit Committee be
         established. The Board, as an entirety, approves that appointment of
         its independent auditor and the related work performed by the auditor
         for services which are not audit related. In its deliberations
         regarding approval of the independent auditor for auditing and other
         services, the Board reviews the auditor's history of representing the
         Company, the fees to be paid and paid historically, the level of
         performance provided by the auditor and the ability of the Company,
         given its lack of profits to obtain similar services for similar costs.

                  Consistent with SEC policies regarding auditor independence,
         the Board of Directors has responsibility for appointing, setting
         compensation and overseeing the work of the independent auditor. In
         recognition of this responsibility, the Board has established a policy
         to pre-approve all audit and permissible non-audit services provided by
         the independent auditor. Prior to engagement of the independent auditor
         for the next year's audit, management advises the Board of the audit
         and permissible non-audit services expected to be rendered during that
         year for each of the categories of services which may provided by the
         independent auditor to the Board for approval. The primary categories
         of services expected to be provided by the independent auditor are as
         described in the fee table set forth above. In addition, management
         will also provide to the Board for its approval a fee proposal for the
         services proposed to be rendered by the independent auditor. Prior to
         the engagement of the independent auditor, the Board will approve both
         the description of audit and permissible non-audit services proposed to
         be rendered by the independent auditor and the budget for all such
         services. The fees are budgeted and the Board requires the independent
         auditor and management to report actual fees versus the budget
         periodically throughout the year by category of service.

                  During the year, circumstances may arise when it may become
         necessary to engage the independent auditor for additional services not
         contemplated in the original pre-approval. In those instances, the
         Board requires separate pre-approval before engaging the independent
         auditor.

                                      -24-
<PAGE>

                                 IEH Corporation

                                    Contents

                        March 31, 2006 and March 25, 2005



<TABLE>
<CAPTION>

                                                                                            Page
                                                                                           Number
                                                                                           ------
<S>                                                                                         <C>
Report of Independent Registered Public Accounting Firm                                     26

Financial Statements:

         Balance Sheets as of March 31, 2006 and March 25, 2005                             27

         Statement of Operations for the twelve months ended March 31, 2006
            and March 25, 2005                                                              29

         Statement of Stockholders' Equity as of March 31, 2006 and March 25, 2005          30

         Statement of Cash Flows for the years ended March 31, 2006 and March 25, 2005      31

Notes to Financial Statements                                                               32

</TABLE>


                                      -25-
<PAGE>


             Report of Independent Registered Public Accounting Firm
             -------------------------------------------------------


Board of Directors
IEH Corporation

We have audited the accompanying balance sheets of IEH Corporation as of March
31, 2006 and March 25, 2005 and the related statements of operations,
stockholders' equity, and cash flows for each of the two years in the periods
ended March 31, 2006 and March 25, 2005. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based upon our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IEH Corporation as of March 31,
2006 and March 25, 2005 and the results of its operations and its cash flows for
each of the two years ended March 31, 2006 and March 25, 2005 in conformity with
U.S. generally accepted accounting principles.


                                                     /s/ Jerome Rosenberg
                                                  ---------------------------
                                                  Jerome Rosenberg, CPA, P.C.
                                                       Melville, New York
                                                         June 10, 2006

                                      -26-
<PAGE>

                                 IEH CORPORATION

                                 BALANCE SHEETS

                     As of March 31, 2006 and March 25, 2005

<TABLE>
<CAPTION>

                                                                    March 31,    March 25,
                                                                      2006        2005
                                                                   ----------   ----------
<S>                                                                <C>          <C>

                                     ASSETS

CURRENT ASSETS:
  Cash                                                             $    8,742   $   25,154
  Accounts receivable, less allowances for doubtful accounts
     of $11,562 at March 31, 2006 and March 25, 2005                  900,347      769,402
  Inventories (Note 2)                                              1,540,423    1,219,103
  Prepaid expenses and other current assets (Note 3)                   25,992       14,212
                                                                   ----------   ----------

          Total current assets                                      2,475,504    2,027,871
                                                                   ----------   ----------


PROPERTY, PLANT AND EQUIPMENT, less accumulated depreciation and
   amortization of $6,373,522 at March 31, 2006
   and $6,169,269 at March 25, 2005 (Note 4)                        1,200,143    1,172,433
                                                                   ----------   ----------
                                                                    1,200,143    1,172,433
                                                                   ----------   ----------

OTHER ASSETS:
  Other assets                                                         23,177       41,562
                                                                   ----------   ----------
                                                                       23,177       41,562
                                                                   ----------   ----------

        Total assets                                               $3,698,824   $3,241,866
                                                                   ==========   ==========
</TABLE>

     The accompanying notes and independent auditors' report should be read
                  in conjunction with the financial statements

                                      -27-
<PAGE>

                                 IEH CORPORATION

                                 BALANCE SHEETS

                     As of March 31, 2006 and March 25, 2005

<TABLE>
<CAPTION>
                                                                             March 31,      March 25,
                                                                               2006            2005
                                                                            -----------    -----------
<S>                                                                              <C>            <C>
                    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts receivable financing (Note 5)                                  $   269,099    $   643,472
    Notes payable, equipment, current portion (Note 7)                            3,358          4,325
    Loans payable- officers (Note 8)                                             79,000        187,744
    Accrued corporate income taxes                                               33,697         28,287
    Accounts payable                                                            775,870        882,646
    Pension plan payable, current portion (Note 10)                              43,000         86,000
    Other current liabilities (Note 6)                                          188,036        194,114
                                                                            -----------    -----------

          Total current liabilities                                           1,392,060      2,026,588
                                                                            -----------    -----------

LONG-TERM LIABILITIES:
    Pension Plan payable, less current portion (Note 10)                         20,000         63,000
    Notes payable, equipment, less current portion (Note 7)                       3,437          6,573
                                                                            -----------    -----------
          Total long-term liabilities                                            23,437         69,573
                                                                            -----------    -----------

          Total liabilities                                                   1,415,497      2,096,161
                                                                            -----------    -----------

STOCKHOLDERS' EQUITY:
    Common stock, $.01 par value; 10,000,000 shares authorized; 2,303,468
      shares issued and outstanding at March 31, 2006 and
      March 25, 2005                                                             23,035         23,035
    Capital in excess of par value                                            2,744,573      2,744,573
    Retained earnings (Deficit)                                                (484,281)    (1,621,903)
                                                                            -----------    -----------

          Total stockholders' equity                                          2,283,327      1,145,705
                                                                            -----------    -----------

          Total liabilities and stockholders' equity                        $ 3,698,824    $ 3,241,866
                                                                            ===========    ===========
</TABLE>

    The accompanying notes and independent auditors' report should be read in
                    conjunction with the financial statements

                                      -28-
<PAGE>

                                 IEH CORPORATION

                             STATEMENT OF OPERATIONS

              For the Years Ended March 31, 2006 and March 25, 2005

                                                             Years Ended
                                                      -------------------------
                                                       March 31,     March 25,
                                                          2006         2005
                                                      -----------   -----------

REVENUE, net sales (Note 15)                          $ 7,588,253   $ 5,321,269
                                                      -----------   -----------

COSTS AND EXPENSES:
  Cost of products sold                                 4,856,281     3,819,234
  Selling, general and administrative                   1,253,458     1,027,222
  Interest expense                                         90,616       104,185
  Depreciation and amortization                           204,253       177,504
                                                      -----------   -----------
                                                        6,404,608     5,128,145
                                                      -----------   -----------


OPERATING INCOME                                        1,183,645       193,124

OTHER INCOME                                                1,171           248
                                                      -----------   -----------

INCOME BEFORE INCOME TAXES                              1,184,816       193,372

PROVISION FOR INCOME TAXES                                (47,194)      (26,888)
                                                      -----------   -----------

NET INCOME                                            $ 1,137,622   $   166,484
                                                      ===========   ===========

BASIC AND DILUTED EARNINGS PER COMMON SHARE (Note 1)  $       .49   $       .07
                                                      ===========   ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
  OUTSTANDING (IN THOUSANDS)                                2,303         2,303
                                                      ===========   ===========




    The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statements

                                      -29-
<PAGE>

                                 IEH CORPORATION

                        STATEMENT OF STOCKHOLDERS' EQUITY

              For the Years Ended March 31, 2006 and March 25, 2005


<TABLE>
<CAPTION>

                                                        Capital in    Retained
                                                        Excess of     Earnings
                                 Common Stock           Par Value     (Deficit)       Total
                           -------------------------   -----------   -----------    -----------
                              Shares        Amount
                           -----------   -----------
<S>                          <C>         <C>           <C>           <C>            <C>
Balances, March 26, 2004     2,303,468   $    23,035   $ 2,744,573   $(1,788,387)   $   979,221

Net income: year ended
  March 25, 2005                                                         166,484        166,484
                           -----------   -----------   -----------   -----------    -----------

Balances, March 25, 2005     2,303,468        23,035     2,744,573    (1,621,903)     1,145,705

Net income: year ended
  March 31, 2006                                                       1,137,622      1,137,622
                           -----------   -----------   -----------   -----------    -----------

Balances, March 31, 2006     2,303,468   $    23,035   $ 2,744,573   $  (484,281)   $ 2,283,327

</TABLE>





    The accompanying notes and independent auditors' report should be read in
                    conjunction with the financial statements

                                      -30-
<PAGE>

                                 IEH CORPORATION

                             STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash

              For the Years Ended March 31, 2006 and March 25, 2005

<TABLE>
<CAPTION>

                                                                             Years Ended
                                                                     --------------------------
                                                                       March 31,     March 25,
                                                                         2006           2005
                                                                     -----------    -----------
<S>                                                                      <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                         $ 1,137,622    $   166,484
                                                                     -----------    -----------

  Adjustments to reconcile net income to net cash used in
    operating activities

  Depreciation and amortization                                          204,253        177,504

Changes in assets and liabilities:
  (Increase) decrease in accounts receivable                            (130,945)      (182,911)
  (Increase) decrease inventories                                       (321,320)      (204,505)
  (Increase) decrease in prepaid expenses and other current assets       (11,780)         2,404
  (Increase) decrease in other assets                                     18,385           (206)

  (Decrease) increase in accounts payable                               (106,776)       144,541
  (Decrease) increase in other current liabilities                        (6,078)        86,775
    Increase in accrued corporate income taxes                             5,410         13,787
  (Decrease) in due to union health & welfare                                 --        (32,200)
  (Decrease) in pension plan payable                                     (86,000)       (56,000)
                                                                     -----------    -----------

               Total adjustments                                        (434,851)       (50,811)
                                                                     -----------    -----------

NET CASH PROVIDED BY (USED) FOR OPERATING ACTIVITIES                     702,771        115,673
                                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:

   Acquisition of property, plant and equipment                         (231,963)      (219,911)
                                                                     -----------    -----------

          NET CASH USED IN INVESTING ACTIVITIES                      $  (231,963)   $  (219,911)
                                                                     -----------    -----------
</TABLE>


    The accompanying notes and independent auditors' report should be read in
                    conjunction with the financial statements

                                      -31-
<PAGE>

                                 IEH CORPORATION

                             STATEMENT OF CASH FLOWS
                           Increase (Decrease) in Cash

              For the Years Ended March 31, 2006 and March 25, 2005

                                                      March 31,     March 25,
                                                        2006         2005
                                                      ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable, equipment        $  (4,103)   $  (9,208)
Proceeds from accounts receivable financing            (374,373)      (1,624)
Proceeds (repayment) of loans payable - officers       (108,744)     135,744
                                                      ---------    ---------

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES    (487,220)     124,912
                                                      ---------    ---------

INCREASE (DECREASE) IN CASH                             (16,412)      20,674

CASH, beginning of period                                25,154        4,480
                                                      ---------    ---------

CASH, end of period                                   $   8,742    $  25,154
                                                      =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION,
  Cash paid during the year for:

     Interest                                         $  84,309    $  95,347
                                                      =========    =========

     Income Taxes                                     $   6,796    $   7,612
                                                      =========    =========



    The accompanying notes and independent auditors' report should be read in
                    conjunction with the financial statements

                                      -32-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 1 -          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                  Description of Business:

                  The Company is engaged in the design, development, manufacture
                  and distribution of high performance electronic printed
                  circuit connectors and specialized interconnection devices.
                  Electronic connectors and interconnection devices are used in
                  providing electrical connections between electronic component
                  assemblies. The Company develops and manufactures connectors,
                  which are designed for a variety of high technology and high
                  performance applications, and are primarily utilized by those
                  users who require highly efficient and dense (the space
                  between connection pins with the connector) electrical
                  connections.

                  The Company is continuously redesigning and adapting its
                  connectors to meet and keep pace with developments in the
                  electronics industry and has, for example, developed
                  connectors for use with flex-circuits now being used in
                  aerospace programs, computers, air-borne communications
                  systems, testing systems and other areas. The Company also
                  services its connectors to meet specified product
                  requirements.

                  Accounting Period:

                  The Company maintains an accounting period based upon a 52-53
                  week year, which ends on the nearest Friday in business days
                  to March 31st. The year ended March 31, 2006, was compromised
                  of 53 weeks. The year ended March 25, 2005 was comprised of 52
                  weeks.

                  Revenue Recognition:

                  Revenues are recognized at the shipping date of the Company's
                  products. The Company has historically adopted the shipping
                  terms that title merchandise passes to the customer at the
                  shipping point (FOB Shipping Point). At this juncture, title
                  has passed, the Company has recognized the sale, inventory has
                  been relieved, and the customer has been invoiced. The Company
                  does not offer any discounts, credits or other sales
                  incentives.

                  The Company's policy with respect to customer returns and
                  allowances as well as product warranty is as follows:

                  The Company will accept a return of defective product within
                  one year from shipment for repair or replacement at the
                  Company's option. If the product is repairable, the Company at
                  its own cost will repair and return to the customer. If
                  unrepairable, the Company will either offer an allowance
                  against payment or will reimburse the customer for the total
                  cost of product.

                  Most of the Company's products are custom ordered by customers
                  for a specific use. The Company provides engineering services
                  as part of the relationship with its customers in developing
                  the custom product. The Company is not obligated to provide
                  such engineering service to its customers. The Company does
                  not charge separately for these services.

                                      -33-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 1 -          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

                  Inventories:

                  Inventories are stated at cost, on a first-in, first-out
                  basis, which does not exceed market value.

                  The Company manufactures products pursuant to specific
                  technical and contractual requirements. The Company
                  historically purchases material in excess of its requirements
                  to avail itself of favorable pricing as well as the
                  possibility of receiving additional orders from customers.
                  This excess may result in material not being used in
                  subsequent periods, which may result in this material being
                  deemed obsolete.

                  The Company annually reviews its purchase and usage activity
                  of its inventory of parts as well as work in process and
                  finished goods to determine which items of inventory have
                  become obsolete within the framework of current and
                  anticipated orders. The Company based upon historical
                  experience has determined that if a part has not been used and
                  purchased or an item of finished goods has not been sold in
                  three years, it is deemed to be obsolete. The Company
                  estimates which materials may be obsolete and which products
                  in work in process or finished goods may be sold at less than
                  cost. A periodic adjustment, based upon historical experience
                  is made to inventory in recognition of this impairment.

                  Concentration of Credit Risk:

                  The Company maintains cash balances at one bank. Amounts on
                  deposit are insured by the Federal Deposit Insurance
                  Corporation up to $100,000 in aggregate. There were no
                  uninsured balances at either March 31, 2006 or March 25, 2005.

                  Property, Plant and Equipment:

                  Property, plant and equipment is stated at cost less
                  accumulated depreciation and amortization. The Company
                  provides for depreciation and amortization using the Double
                  Declining Balance method over the estimated useful lives (5-7
                  years) of the related assets.

                  Maintenance and repair expenditures are charged to operations,
                  and renewals and betterments are capitalized. Items of
                  property, plant and equipment, which are sold, retired or
                  otherwise disposed of, are removed from the asset and
                  accumulated depreciation or amortization account. Any gain or
                  loss thereon is either credited or charged to operations.

                  Income Taxes:

                  The Company follows the policy of treating investment tax
                  credits as a reduction in the provision for federal income tax
                  in the year in which the credit arises or may be utilized.
                  Deferred income taxes arise from temporary differences
                  resulting from different depreciation methods used for
                  financial and income tax purposes. The Company has adopted
                  Statement of Financial Accounting Standards (SFAS) No. 109,
                  "Accounting for Income Taxes".

                                      -34-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 1 -          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

                  Net Income Per Share:

                  The Company has adopted the provisions of SFAS No. 128,
                  "Earnings Per Share", which requires the disclosure of "basic"
                  and "diluted" earnings (loss) per share. Basic earnings per
                  share is computed by dividing net income by the weighted
                  average number of common shares outstanding during each
                  period. Diluted earnings per share is similar to basic
                  earnings per share except that the weighted average number of
                  common shares outstanding is increased to reflect the dilutive
                  effect of potential common shares, such as those issuable upon
                  the exercise of stock or warrants, as if they had been issued.
                  For the years ended March 31, 2006 and March 25, 2005, there
                  were no items of potential dilution that would impact on the
                  computation of diluted earnings or loss per share.

                  Fair Value of Financial Instruments:

                  The carrying value of the Company's financial instruments,
                  consisting of accounts receivable, accounts payable, and
                  borrowings, approximate their fair value due to the relatively
                  short maturity (three months) of these instruments.

                  Use of Estimates:

                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the reported
                  amounts of assets and liabilities, revenues and expenses, and
                  disclosure of contingent assets and liabilities at the date of
                  the financial statements. Actual amounts could differ from
                  those estimates.

                  Impairment of Long-Lived Assets:

                  SFAS No. 144, "Accounting For The Impairment of Long-Lived
                  Assets And Long-Lived Assets To Be Disposed Of", requires that
                  long-lived assets and certain identifiable intangibles to be
                  held and used by an entity be reviewed for impairment whenever
                  events or changes in circumstances indicate that the carrying
                  amount of an asset may not be recoverable. The Company has
                  adopted SFAS No. 144. There were no long-lived asset
                  impairments recognized by the Company for the years ended
                  March 31, 2006 and March 25, 2005.

                  Reporting Comprehensive Income:

                  The Company has adopted the provisions of SFAS No. 130,
                  "Reporting Comprehensive Income". This statement established
                  standards for reporting and display of comprehensive income
                  and its components (revenues, expenses, gains and losses) in
                  an entity's financial statements. This Statement requires an
                  entity to classify items of other comprehensive income by
                  their nature in a financial statement and display the
                  accumulated balance of other comprehensive income separately
                  from retained earnings and additional paid-in capital in the
                  equity section of a statement of financial position. There
                  were no material items of comprehensive income to report for
                  the years ended March 31, 2006 and March 25, 2005.

                                      -35-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 1 -          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):

                  Segment Information:

                  The Company has adopted the provisions of SFAS No. 131,
                  "Disclosures About Segment of An Enterprise and Related
                  Information." This Statement requires public enterprises to
                  report financial and descriptive information about its
                  reportable operating segments and establishes standards for
                  related disclosures about product and services, geographic
                  areas, and major customers. The adoption of SFAS No. 131 did
                  not affect the Company's presentation of its results of
                  operations or financial position.

                  Research and Development:

                  The Company provides personalized engineering services to its
                  customers by designing connectors for specific customer
                  applications. The employment of electromechanical engineers is
                  the anticipated cornerstone of the Company's future growth.
                  The Company maintains a testing laboratory where its engineers
                  experiment with new connector designs based on changes in
                  technology and in an attempt to create innovative, more
                  efficient connector designs.

                  The Company expended $21,000 and $31,000 for the years ended
                  March 31, 2006 and March 25, 2005, respectively, on Company
                  sponsored research and development activities relating to the
                  development of new designs, techniques and the improvement of
                  existing designs. In addition, the Company received $21,000 in
                  revenues for the year ended March 31, 2006 and $31,000 for the
                  year ended March 25, 2005, respectively, pursuant to customer
                  sponsored research activities.

                  Effect of New Accounting Pronouncements:

                  In May 2005, the FASB issued SFAS No. 154, "Accounting Changes
                  and Error Corrections," which replaces APB Opinion No. 20,
                  "Accounting Changes" and FASB Statement No. 3, "Reporting
                  Accounting Changes in Interim Financial Statements." This
                  pronouncement applies to all voluntary changes in accounting
                  principle, and revises the requirements for accounting for and
                  reporting a change in accounting principle. SFAS No. 154
                  requires retroactive application to prior periods' financial
                  statements of a voluntary change in accounting principle,
                  unless it is impracticable to do so. This pronouncement also
                  requires that a change in the method of depreciation,
                  amortization, or depletion for long-lived, non-financial
                  assets be accounted for as a change in accounting estimate
                  that is affected by a change in accounting principle. SFAS No.
                  154 is effective for accounting changes and corrections of
                  errors made in fiscal years beginning after December 15, 2005.
                  The Statement does not change the transition provisions of any
                  existing accounting pronouncements, including those that are
                  in a transition phase as of the effective date of SFAS No.
                  154. The adoption of this pronouncement is not expected to
                  have a material impact on the Company's future financial
                  statements.

                                      -36-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 2 -          INVENTORIES:

                  Inventories are stated at cost, on a first-in, first-out
                  basis, which does not exceed market value.

                  The Company manufactures products pursuant to specific
                  technical and contractual requirements. The Company
                  historically purchases material in excess of its requirements
                  to avail itself of favorable pricing as well as the
                  possibility of receiving additional orders from customers.
                  This excess may result in material not being used in
                  subsequent periods, which may result in this material being
                  deemed obsolete.

                  The Company annually reviews its purchase and usage activity
                  of its inventory of parts as well as work in process and
                  finished goods to determine which items of inventory have
                  become obsolete within the framework of current and
                  anticipated orders. The Company based upon historical
                  experience has determined that if a part has not been used and
                  purchased or an item of finished goods has not been sold in
                  three years, it is deemed to be obsolete. The Company
                  estimates which materials may be obsolete and which products
                  in work in process or finished goods may be sold at less than
                  cost. A periodic adjustment, based upon historical experience
                  is made to inventory in recognition of this impairment.

                 Inventories are comprised of the following:

                                      March 31,    March 25,
                                        2006         2005
                                     ----------   ----------

                  Raw materials      $  907,849   $  824,926
                  Work in progress      130,480      210,292
                  Finished goods        502,094      183,885
                                     ----------   ----------

                                     $1,540,423   $1,219,103
                                     ==========   ==========

Note 3 -          PREPAID EXPENSES AND OTHER CURRENT ASSETS:

                  Prepaid expenses and other current assets are comprised of the
                  following:

                                           March 31,  March 25,
                                             2006       2005
                                            -------   -------

                  Prepaid insurance         $13,955   $14,062
                  Prepaid corporate taxes    11,905        --
                  Other current assets          132       150
                                            -------   -------
                                            $25,992   $14,212
                                            =======   =======

                                      -37-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 4 -          PROPERTY, PLANT AND EQUIPMENT:

                  Property, plant and equipment are as follows:

                                                        March 31     March 25,
                                                          2006         2005
                                                       ----------   ----------

                  Computers                            $  205,799   $  198,257
                  Leasehold improvements                  585,831      585,831
                  Machinery and equipment               4,705,561    4,549,183
                  Tools and dies                        1,912,989    1,846,073
                  Furniture and fixture                   155,935      154,808
                  Website development cost                  7,550        7,550
                                                       ----------   ----------

                                                        7,573,665    7,341,702
                  Less: accumulated depreciation and
                  amortization                          6,373,522    6,169,269
                                                       ----------   ----------

                                                       $1,200,143   $1,172,433
                                                       ==========   ==========

Note 5 -          ACCOUNTS RECEIVABLE FINANCING:

                  The Company entered into an accounts receivable financing
                  agreement whereby it can borrow up to eighty percent of its
                  eligible receivables (as defined in the agreement) at an
                  interest rate of 2 1/2 % above JP Morgan Chase's publicly
                  announced rate of 7.75% at March 31, 2006, with a minimum of
                  12% per annum. The agreement has an initial term of one year
                  and will automatically renew for successive one-year terms,
                  unless terminated by the Company or Lender upon receiving
                  sixty days prior notice. The loan is secured by the Company's
                  accounts receivable and inventories. The balance due under
                  this agreement as of March 31, 2006 was $269,099. The balance
                  due as of March 25, 2005 was $643,472.


Note 6 -          OTHER CURRENT LIABILITIES:

                  Other current liabilities are comprised of the following:

                                                  March 31,  March 25,
                                                    2006       2005
                                                  --------   --------

                  Payroll and vacation accruals   $169,919   $105,812
                  Sales commissions                 15,367     14,882
                  Other                              2,750     73,420
                                                  --------   --------
                                                  $188,036   $194,114
                                                  ========   ========

                                      -38-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 7 -          NOTES PAYABLE EQUIPMENT:

                  The Company financed the acquisition of new equipment with
                  notes payable. The notes are payable over a sixty month
                  period. The balance remaining at March 31, 2006 amounted to
                  $6,795. The interest rate on the remaining lease is 22%.

                  Aggregate future principal payments are as follows:

                      Fiscal Year Ending March:
                  2007                                  $  3,358
                  2008                                     3,437
                                                        --------
                                                        $  6,795
                                                        ========

Note 8 -          RELATED PARTIES TRANSACTIONS

                  During the year ended March 26, 2004, two of the Company's
                  officers loaned the Company a total of $52,000 on a
                  non-interest bearing basis. The Company used these funds as a
                  source of additional working capital.

                  During the year ended March 25, 2005, one of these officers
                  loaned the Company an additional $135,744 on a non-interest
                  bearing basis as well. These funds were also used by the
                  Company for working capital requirements. Through the period
                  ended March 31, 2006, the Company had repaid $108,744 of the
                  total funds loaned to it.

                  As of March 31, 2006, the amount owed to these officers was
                  $79,000.


Note 9 -          INCOME TAXES:

                  Income taxes are provided for the tax effects of transactions
                  reported in the financial statements, and consist of taxes
                  currently due as well as deferred taxes related to differences
                  between financial statement and tax basis of assets and
                  liabilities for financial statement and income tax reporting
                  purposes. Deferred tax assets and liabilities represent the
                  future tax consequences of these temporary differences, which
                  will either be taxable or deductible in the year in which the
                  assets or liabilities are recovered or settled. Accordingly,
                  measurement of the deferred tax assets and liabilities
                  attributable to the book-tax basis differentials are computed
                  at a rate of 34% for federal and l2% for state and local tax
                  purposes.

                                      -39-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 9 -          INCOME TAXES (continued):

                  The components of the deferred tax assets and liabilities are
                  as follows:

<TABLE>
<CAPTION>
                                                                        March 31,      March 25,
                                                                          2006           2005
                                                                       -----------    -----------
<S>                                                                      <C>            <C>
                  Deferred tax assets:

                  Net operating loss carryforwards                     $ 1,765,056    $ 1,933,105
                                                                       -----------    -----------

                  Gross deferred assets tax assets                       1,765,056      1,933,105

                  Deferred tax liabilities:

                  State income taxes                                       (51,600)       (79,111)
                                                                       -----------    -----------

                  Net deferred tax assets before valuation allowance     1,713,456      1,853,994

                  Valuation allowance                                   (1,713,456)    (1,853,994)
                                                                       -----------    -----------

                  Net deferred tax assets                              $         0    $         0
                                                                       ===========    ===========
</TABLE>

                  At March 31, 2000, the Company established a 100% valuation
                  allowance for the net deferred tax assets, as management could
                  not determine that it was more likely than not that the
                  deferred tax assets could be realized. The change in valuation
                  allowance amounted to $140,538 for the year ended March 31,
                  2006.

                  As of March 31, 2006, the Company has available Federal net
                  operating loss carryforwards (NOL's) totaling approximately
                  $1,765,056 which expire at various times through March 31,
                  2012, for State and Local purposes, the company has available
                  NOL's approximating $1,997,834, which expire at various times
                  through March 31, 2012.

                  Utilization of the NOL's may be limited pursuant to Internal
                  Revenue Code Section 382 should significant changes to the
                  existing ownership of the Company occur.

                  A reconciliation of income taxes computed at the Federal
                  statutory rate as compared to income tax expense at the
                  effective income tax is as follows:
<TABLE>
<CAPTION>
                                                                  March 31,    March 25,
                                                                    2006          2005
                                                                  ---------    ---------
<S>                                                                 <C>         <C>
                  Federal statutory income tax (benefit) rate       (34.0)%     (34.0)%

                  State tax benefit, net of Federal liability       (12.2)%     (12.2)%

                  Net change in valuation allowance                   46.2%       46.2%

                  Effective income tax (benefit) rate                ( - )%      ( - )%
</TABLE>

                                      -40-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 10 -         PENSION PLAN-SALARIED PERSONNEL:

                  On June 30, 1995, the Company applied to the Pension Benefit
                  Guaranty Corporation ("PBGC") to have the PBGC assume all of
                  the Company's responsibilities and liabilities under its
                  Salaried Pension Plan. On April 26, 1996, the PBGC determined
                  that the Salaried Pension Plan did not have sufficient assets
                  available to pay benefits, which were and are currently due
                  under the terms of the Plan.

                  The PBGC further determined that pursuant to the provisions of
                  the Employment Retirement Income Security Act of 1974, as
                  amended ("ERISA"), that the Plan must be terminated in order
                  to protect the interests of the Plan's participants.
                  Accordingly, the PBGC proceeded pursuant to ERISA to have the
                  Plan terminated and the PBGC appointed as statutory trustee,
                  and to have July 31, 1995 established as the Plan's
                  termination date.

                  The Company and the PBGC negotiated a settlement on the entire
                  matter and on July 2, 2001, an agreement was reached whereby
                  the Company's liability to the PBGC was reduced to $244,000.
                  The Company will make monthly payments to the PBGC as follows:

                     September 1, 2003 to August 1, 2004     $2,000 per month
                     September 1, 2004 to August 1, 2006     $3,000 per month
                     September 1, 2006 to August 1, 2007     $4,000 per month


                  Additionally, the Company has made balloon payments of $25,000
                  each on January 1, 2004, May 1, 2004, May 1, 2005 and January
                  1, 2006.

                  The Company will also grant the PBGC a lien on the Company's
                  machinery and equipment.

                  As a result of this agreement the amount due the PBGC was
                  restated to $244,000. $86,000 was paid during the year ended
                  March 31, 2006, $56,000 was paid during the year ended March
                  25, 2005 and $39,000 was paid during the year ended March 26,
                  2004. The remaining balance of $63,000 is reported as follows:
                  $43,000 as a current liability and $20,000 as a long-term
                  liability on the accompanying financial statements.

Note 11 -         CHANGES IN STOCKHOLDERS' EQUITY:

                  The accumulated deficit decreased by $1,137,622, which
                  represents the net income for the fiscal year ended March 31,
                  2006.

                                      -41-
<PAGE>

                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


Note 12-          2002 EMPLOYEE STOCK OPTION PLAN:

                  On September 21, 2001 the Company's shareholders approved the
                  adoption of the Company's 2002 Employees Stock Option Plan
                  ("2002 Plan") to provide for the grant of options to purchase
                  up to 750,000 shares of the Company's common stock to all
                  employees, including senior management.

                  Options granted to employees under this plan may be designated
                  as options which qualify for incentive stock option treatment
                  under Section 422A of the Internal Revenue Code, or options
                  which do not so qualify.

                  Under this 2002 Plan, the exercise price of an option
                  designated as an incentive stock option shall not be less than
                  the fair market value of the Company's common stock on the day
                  the option is granted. In the event an option designated as an
                  incentive stock option is granted to a ten percent (10%)
                  shareholder, such exercise price shall be at least 110 percent
                  (110%) of the fair market value or the Company's common stock
                  and the option must not be exercisable after the expiration of
                  five years from the day of the grant.

                  Exercise prices of non-incentive stock options may be less
                  than the fair market value of the Company's common stock.

                  The aggregate fair market value of shares subject to options
                  granted to a participant(s), which are designated as incentive
                  stock options, and which become exercisable in any calendar
                  year, shall not exceed $100,000. As of March 31, 2006, no
                  options had been granted under the 2002 Plan.

Note 13 -         CASH BONUS PLAN:

                  In 1987, the Company adopted a cash bonus plan ("Cash Bonus
                  Plan") for Executive Officers. Contributions to the Cash Bonus
                  Plan are made by the Company only after pre-tax operating
                  profits exceed $150,000 for a fiscal year, and then to the
                  extent of 10% of the excess of the greater of $150,000 or 25%
                  of pre-tax operating profits. For the year ended March 31,
                  2006, the contribution was $75,500. For the year ended March
                  25, 2005 the contribution was $4,188.

                                      -42-
<PAGE>


                                 IEH CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

Note 14 -         COMMITMENTS:

                  The Company exercised its option to renew its lease on its
                  facility for 10 years. The original lease was in effect
                  through August 23, 2001.

                  The Company is obligated under this lease renewal through
                  August 23, 2011, at minimum annual rentals as follows:

                  Fiscal year ending March:

                  2007                       $ 112,765
                  2008                         112,765
                  2009                         112,765
                  2010                         112,765
                  2011                          75,177
                                             ---------
                                             $ 526,237
                                             =========

                  The rental expense for the years ended March 31, 2006 and
                  March 25, 2005 was $136,325and $169,975, respectively.

                  Rental expense for the year ended March 31, 2006 includes a
                  surcharge of $23,560.

                  The Company has a collective bargaining multi-employer pension
                  plan with the United Auto Workers of America, Local 259.
                  Contributions are made in accordance with a negotiated labor
                  contract and are based on the number of covered employees
                  employed per month. With the passage of the Multi-Employer
                  Pension Plan Amendments Act of 1990 (the "Act"), the Company
                  may become subject to liabilities in excess of contributions
                  made under the collective bargaining agreement. Generally,
                  these liabilities are contingent upon the termination,
                  withdrawal, or partial withdrawal from the Plan.

                  The Company has not taken any action to terminate, withdraw or
                  partially withdraw from the Plan nor does it intend to do so
                  in the future. Under the Act, liabilities would be based upon
                  the Company's proportional share of the Plan's unfunded vested
                  benefits, which is currently not available. The amount of
                  accumulated benefits and net assets of such Plan also is not
                  currently available to the Company. The total contributions
                  charged to operations under this pension plan were $62,771 for
                  the year ended March 31, 2006 and $54,643 for the year ended
                  March 25, 2005.

Note 15 -         REVENUES FROM MAJOR CUSTOMERS:

                  In the fiscal years ended March 31, 2006 and March 25, 2005,
                  approximately 19% and 34% of the Company's total revenues were
                  earned from one customer. Total sales to this customer were
                  approximately $1,469,000 and $1,783,000, respectively. No
                  other customer accounted for over 10% of the Company's sales.
                  Accounts receivable as of March 31, 2006, included receivables
                  from three customers, which amounted to 43% of the total
                  accounts receivable.

                                      -43-
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                             IEH CORPORATION

                             By:    /s/ Michael Offerman
                                   -----------------------
                                   Michael Offerman
                                   President

Dated:   July 17, 2006

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


/s/    Michael Offerman                                   July 17, 2006
--------------------------------------------
Michael Offerman, Chairman of the
 Board and President

/s/  Robert Knoth                                         July 17, 2006
--------------------------------------------
Robert Knoth, Secretary and
 Treasurer; Chief Financial Officer,
 Controller and Principal Accounting Officer

/s/   Murray Sennet                                       July 17, 2006
--------------------------------------------
Murray Sennet, Director


/s/ Alan Gottlieb                                         July 17, 2006
--------------------------------------------
Alan Gottlieb, Director


                                      -44-