**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**Form      10-QSB**

**[x]      Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of      1934**

**December      31, 2006**

**[      ] Transition Report under Section 13 or 15(d) of the Exchange Act For the      Transition Period from ________ to ___________**

**Industrial      Enterprises of America, Inc.**

|   |  Nevada                                                                    | ** 13-3963499**                     |
|--------|---------------------------------------------------------------------------------|------------------------------------------|
|   |  (State                or jurisdiction of incorporation                    |  (I.R.S.                Employer    |
|   |  or                organization)                                           |  Identification                No.) |
|   |                                                                            |                                     |
|   |  **711                Third Avenue, Suite 1505, New York, New York**  | ** 10017**                          |
|   |  (Address                of principal executive offices)                   |  (Zip                Code)          |

**(212)      490-3100**

----

**Table      of Contents**

|                                                                                                                                                                                                         | **Page**             |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|
|                                                                                                                                                                                                         |                 |
| Recent                Developments Explanatory                Note                                                                                                                                      | 1 1   |
| **Part                I**                                                                                                                                                                                    |                 |
| Item                1. Financial Statements.................................................................                         | 1                    |
| Item                2. Management’s Discussion and Analysis or Plan of Operations                ............                                                                          | 17                   |
| Item                3. Controls and Procedures............................................................                                   | 18                   |
|                                                                                                                                                                                                         |                 |
| **Part                II**                                                                                                                                                                                   |                 |
| Item                1. Legal Proceedings...................................................................                      | 18                   |
| Item                2. Unregistered Sales of Equity Securities and Use of Proceeds                .........                                                                                      | 19                   |
| Item                3. Defaults Upon Senior Securities................................................                                               | 19                   |
| Item                4. Submission of Matters to a Vote of Security Holders                ...................                                                                        | 19                   |
| Item                5. Other Information...................................................................                  | 19                   |
| Item                6. Exhibits................................................................................. | 20                   |
|                                                                                                                                                                                                         |                 |
|                                                                                                                                                                                                         |                 |

----

**Explanatory      Note**

**Recent      Developments**

**Item      1. Financial Statements.**

***Critical      Accounting Policies***

**Revenue      Recognition**

----

**Inventory**

**Machinery      and Equipment**

**Accounting      for Stock-Based Compensation**

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Balance Sheet**

**December      31, 2006**

**(Unaudited)**

|                        |                                                                         |                                                             |       |   |                       | **December                31, 2006** |
|-----------------------------|------------------------------------------------------------------------------|------------------------------------------------------------------|------------|--------|----------------------------|--------------------------------------|
|                        |                                                                         |                                                             |       |   |                       | **(Unaudited)**                      |
| ASSETS                      |                                                                         |                                                             |       |   |
|                        | Current                Assets                                                |                                                             |       |
|                        |                                                                         | Cash                                                             |       |   | $                1,717,581 |
|                        |                                                                         | Accounts                receivable, net of allowance of $462,065 | 13,105,422 |
|                        |                                                                         | Due                from related parties                          | 342,166    |
|                        |                                                                         | Inventory                                                        | 6,147,752  |
|                        |                                                                         | Notes                receivable                                  | 1,141,583  |
|                        |                                                                         | Prepaid                expenses                                  | 4,636,960  |
|                        | Total                Current Assets                                          | $27,091,464                                                      |
|                        | Investment                in common stock                                    | 609,230                                                          |
|                        | Property,                plant and equipment net of accumulated depreciation | 9,371,141                                                        |
|                        | Investment                in joint venture                                   | 6,993,931                                                        |
|                        | Other                Assets                                                  | 413,461                                                          |
|                        | Other                intangibles, net of amortization                        | 83,367                                                           |
|                        | Debt                issuance costs, net of amortization                      | 866,917                                                          |
|                        | Goodwill                                                                     | 5,890,418                                                        |
| TOTAL                ASSETS | $51,319,929                                                                  |

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Balance Sheet**

**December      31, 2006**

**(Unaudited)**

| LIABILITIES                & SHAREHOLDERS' EQUITY       |
|-------------------------------------------------------------|
|                                                        | Current                Liabilities |   |
|                                                        |   | Current                maturities of long term debt | $                5,670,499 |
|                                                        |   | Current                maturities of long term debt related parties | 2,575,758 |
|                                                        |   | Accounts                payable | 7,398,684 |
|                                                        |   | Payable                related parties | 22,952 |
|                                                        |   | Accrued                payables | 459,373 |
|                                                        |   | Accrued                interest | 120,467 |
|                                                        |   | Accrued                interest to shareholders and related parties | 207,042 |
|                                                        | Total                Current Liabilities | $16,454,775 |
|                                                        | Long                Term Liabilities |   |
|                                                        |   | Notes                payable net of current debt | 1,115,675 |
|                                                        |   | Convertible                notes payable | 1,350,000 |
|                                                        |   | Notes                payable related parties | 3,583,996 |
|                                                        |   | Discount                on notes payable | (3,620,189) |
|                                                        | Total                Long Term Liabilities | $                2,429,482 |
|                                                        | Total                Liabilities |   | $18,884,257 |
|                                                        | Shareholders'                Equity |   |
|                                                        |   | Preferred                stock, $0.001 par value, |   |
|                                                        |   |   | 10,000,000                shares authorized; -0- shares issued and |   |
|                                                        |   |   | outstanding                as of December 31, 2006 | $                - |
|                                                        |   | Common                stock, $0.01 par value, |   |
|                                                        |   |   | 15,000,000                shares authorized; 12,543,622 shares issued and |   |
|                                                        |   |   | outstanding                as of December 31, 2006 | 125,436 |
|                                                        |   | Additional                paid-in capital | 47,313,387 |
|                                                        |   | Subscribed                stock payable | 672,608 |
|                                                        |   | Shareholder                receivable | (168,000) |
|                                                        |   | Equity                development fees, unamortized | (439,003) |
|                                                        |   | Unrealized                securities gains (losses) | (2,323,957) |
|                                                        |   | Retained                (deficit) | (12,744,801) |
|                                                        | Total                Shareholders' Equity | $32,435,670 |
| TOTAL                LIABILITIES & SHAREHOLDERS' EQUITY | $51,319,927 |

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Statements of Operations**

**(Unaudited)**

|                                                                  |                                                   |                         | **Three                  Months Ended** |                         | **Six                  Months Ended**        |
|-----------------------------------------------------------------------|--------------------------------------------------------|------------------------------|-----------------------------------------|------------------------------|----------------------------------------------|
|                                                                  |                                                   |                         | **Dec                  31, 2006**       |                         | **Dec                  31, 2005 (restated)** |   | **Dec                  31, 2006** |   | **Dec                  31, 2005 (restated)** |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Revenues                                                              | $16,981,153                                            |                         | $5,626,379                              |                         | $27,016,539                                  |   | $10,551,573 |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Cost                  of Goods Sold                                   | 12,957,840                                             |                         | 4,236,325                               |                         | 20,203,356                                   |   | 7,745,140 |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Gross                  Profit                                         | $                  4,023,313                           |                         | $1,390,054                              |                         | $6,813,183                                   |   | $                  2,806,433 |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Expenses:                                                             |                                                   |                         |                                    |                         |                                         |   |   |
|                                                                  | Selling,                  general & administrative | 890,923                      |                                    | 880,310                      |                                         | 2,133,536 |   | 1,748,560 |
|                                                                  | Doubtful                  account expense              | -                            |                                    | -                            |                                         | 312,514 |   | - |
|                                                                  | Salaries                  and contract labor           | 273,453                      |                                    | 216,365                      |                                         | 806,800 |   | 293,211 |
|                                                                  | Depreciation                  and amortization         | 487,968                      |                                    | 88,508                       |                                         | 907,593 |   | 119,167 |
|                                                                  | Legal                  and professional fees           | 113,776                      |                                    | 334,774                      |                                         | 281,318 |   | 470,967 |
|                                                                  | Total                  Expenses                        | $                  1,766,120 |                                    | $                  1,519,957 |                                         | $                  4,441,761 |   | $                  2,631,906 |
|                                                                  | Income                  (loss) from operations         | $2,257,193                   |                                    | $                  (129,903) |                                         | $                  2,371,422 |   | $                  174,527 |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Other                  income (expense)                               |                                                   |                         |                                    |                         |                                         |   |   |
| Interest                  expense                                     | (4,096,012)                                            |                         | (938,539)                               |                         | (5,925,881)                                  |   | (1,539,966) |
| Foreign                  exchange loss                                |                                                   |                         | (9,952)                                 |                         | -                                            |   | (21,891) |   | - |
| Proceeds                  from sale of securities                     | 22,733                                                 |                         | 506,778                                 |                         | 64,335                                       |   | 506,778 |
| Litigation                  settlement revenues                       | -                                                      |                         | -                                       |                         | 1,045,739                                    |   | - |
| Equipment                  and realty option revenues                 | -                                                      |                         | -                                       |                         | 375,000                                      |   | - |
| Gain                  on disposition of plan and facilities           | -                                                      |                         | -                                       |                         | 1,000,000                                    |   | - |
| Miscellaneous                  income                                 | 15,147                                                 |                         | 8,775                                   |                         | 34,790                                       |   | 10,289 |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Net                  income (loss)                                    | $(1,810,891)                                           |                         | $                  (552,889)            |                         | $                  (1,056,486)               |   | $                  (848,371) |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Net                  income (loss) per share basic and diluted        | $(0.19)                                                |                         | $(0.12)                                 |                         | $(0.12)                                      |   | $(0.21) |
|                                                                  |                                                   |                         |                                    |                         |                                         |   |   |   |   |
| Weighted                  average number of common shares outstanding | 9,690,961                                              |                         | 4,532,831                               |                         | 9,059,764                                    |   | 4,085,187 |

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Statements of Cash Flows**

**(Unaudited)**
** **

|                                                                                                    |                                                                      |                                                                        |                         | **Six                Months Ended**  |
|---------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|-----------------------------------------------------------------------------|------------------------------|--------------------------------------|
|                                                                                                    |                                                                      |                                                                        |                         | **December                31, 2006** |   | **December                31,                2005  (****Restated)** |
| **Operating                activities**                                                                 |                                                                      |                                                                        |                         |
|                                                                                                    | Net                income (loss)                                          | $                (1,056,486)                                                |                         | $                (848,371)           |
|                                                                                                    | Non-cash                items                                             |                                                                        |                         |                                 |
|                                                                                                    |                                                                      | Depreciation                and amortization                                | 520,416                      |                                 | 119,167 |
|                                                                                                    |                                                                      | Amortization                of prepaid consulting fees                      | 284,245                      |                                 | - |
|                                                                                                    |                                                                      | Debt                discount and beneficial conversion feature amortization | 1,802,123                    |                                 | 468,949 |
|                                                                                                    |                                                                      | Debt                issuance costs amortized                                | 444,191                      |                                 | 295,415 |
|                                                                                                    |                                                                      | Gain                on settlement of litigation                             | 38,399                       |                                 | - |
|                                                                                                    | Write-off                of prepaid acquisition costs                     | 125,000                                                                     |                         | -                                    |
|                                                                                                    |                                                                      | Amortization                of directors fees                               | 32,625                       |                                 | - |
|                                                                                                    |                                                                      | Amortization                of equity development fees                      | 74,806                       |                                 | - |
|                                                                                                    |                                                                      | Stock                based compensation                                     | -                            |                                 | 155,880 |
|                                                                                                    |                                                                      | Stock                based charitable donations                             | -                            |                                 | - |
|                                                                                                    |                                                                      | Stock                sales for notes receivable                             | -                            |                                 | (494,233) |
|                                                                                                    | Net                changes in working capital accounts                    |                                                                        |                         |                                 |
|                                                                                                    | Accounts                receivable                                        | (7,340,412)                                                                 |                         | (852,950)                            |
|                                                                                                    | Other                receivable                                           | 377,286                                                                     |                         | -                                    |
|                                                                                                    | Related                party receivable                                   | -                                                                           |                         | 186,684                              |
|                                                                                                    | Prepaid                expenses                                           | 21,143                                                                      |                         | (170,179)                            |
|                                                                                                    | Inventory                                                                 | 2,207,122                                                                   |                         | (415,537)                            |
|                                                                                                    | Other                current assets                                       | 4,358                                                                       |                         | -                                    |
|                                                                                                    | Accounts                payable                                           | 732,437                                                                     |                         | 544,767                              |
|                                                                                                    | Related                party payable                                      | -                                                                           |                         | 304,773                              |
|                                                                                                    | Accrued                interest                                           | 106,877                                                                     |                         | 86,128                               |
|                                                                                                    | Accrued                interest related parties                           | -                                                                           |                         | 281,733                              |
|                                                                                                    | Current                notes payable related party                        | -                                                                           |                         | 644,326                              |
|                                                                                                    | Accrued                expenses                                           | (351,091)                                                                   |                         | (504,817)                            |
|                                                                                                    | Other                payables                                             | (1,373)                                                                     |                         | 13,784                               |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |
|                                                                                                    | **Net                cash (used) by operating activities**                | **$                (1,978,334)**                                            |                         | **$                (184,481)**       |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |
| **Investing                activities**                                                                 |                                                                      |                                                                        |                         |
|                                                                                                    | Notes                receivable - other                                   | $                (641,583)                                                  |                         | $                5,767               |
|                                                                                                    | Payments                on due to related parties                         | (41,194)                                                                    |                         | -                                    |
|                                                                                                    | Payments                on related party loans                            | (306,684)                                                                   |                         | (334,068)                            |
|                                                                                                    | Sale                of shares in marketable securities                    | 7,629                                                                       |                         | -                                    |
|                                                                                                    | Additions                to property, plant and equipment                 | (683,140)                                                                   |                         | (134,864)                            |
|                                                                                                    | Investment                in First Defense, Inc.                          | (214,398)                                                                   |                         | -                                    |
|                                                                                                    | Investment                in subsidiaries                                 | -                                                                           |                         | (1,306,463)                          |
|                                                                                                    | Note                receivable - Fortco                                   | 500,000                                                                     |                         | -                                    |
|                                                                                                    | Note                receivable - JS Realty                                | (100,000)                                                                   |                         | -                                    |
|                                                                                                    | Other                                                                     | 67,288                                                                      |                         | (20,000)                             |
|                                                                                                    | **Net                cash (used) by investing activities**                | **$                (1,412,082)**                                            |                         | **$                (1,455,560)**     |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |
| **Financing                activities**                                                                 |                                                                      |                                                                        |                         |
|                                                                                                    | Proceeds                from issuance of debt                             | $                10,231,540                                                 |                         | $                9,328,277           |
|                                                                                                    | Principal                payments on debt                                 | (11,982,173)                                                                |                         | (7,273,194)                          |
|                                                                                                    | Proceeds                from notes payable related party and shareholders | 375,000                                                                     |                         | 50,000                               |
|                                                                                                    | Payments                on lease payable                                  | (90,499)                                                                    |                         | -                                    |
|                                                                                                    | Accrued                interest to related parties                        | 84,806                                                                      |                         | -                                    |
|                                                                                                    | Proceeds                from issuance of convertible debt                 | 1,000,000                                                                   |                         | -                                    |
|                                                                                                    | Payments                on convertible debt                               | (1,973,000)                                                                 |                         | -                                    |
|                                                                                                    | Proceeds                from issuance of common stock                     | 7,176,114                                                                   |                         | 40,000                               |
|                                                                                                    | Proceeds                from un-issued common stock                       | 77,834                                                                      |                         | -                                    |
|                                                                                                    | Subscribed                stock                                           | (100,000)                                                                   |                         | -                                    |
|                                                                                                    | Equity                development fees                                    | -                                                                           |                         | (50,000)                             |
|                                                                                                    | **Net                cash provided by Financing Activities**              | **$                4,799,622**                                              |                         | **$                1,761,015**       |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |
| **Net                cash increase for period**                                                         | **$                1,409,206**                                            |                                                                        | **$                120,974** |
| Cash                at beginning of period                                                              | 308,375                                                                   |                                                                        | 354,583                      |
| **Cash                at end of period**                                                                | **$                1,717,581**                                            |                                                                        | **$                475,557** |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |   |   |
| **SUPPLEMENTAL                DISCLOSURES RELATED TO CASH FLOWS:**                                      |                                                                      |                                                                        |                         |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |   |   |
|                                                                                                    | Interest                paid                                              | $                1,449,084                                                  |                         | $                407,741             |
|                                                                                                    | Taxes                paid                                                 | $                -                                                          |                         | $                -                   |
|                                                                                                    |                                                                      |                                                                        |                         |                                 |   |   |
| **SUPPLEMENTAL                SCHEDULE OF NON-CASH INVESTING AND FINANCING                ACTIVITIES:** |                                                                      |                                                                        |
|                                                                                                    | Notes                receivable for Power3 Medical Products stock sales   | $                -                                                          |                         | $                500,000             |
|                                                                                                    | Notes                payable for Unifide and Todays Way acquisition       | $                -                                                          |                         | $                3,750,000           |
|                                                                                                    | Debt                converted to common stock                             | $                1,019,494                                                  |                         | $                -                   |
|                                                                                                    | Litigation                settlement for convertible debt                 | $                2,042,760                                                  |                         | $                -                   |
|                                                                                                    | Accrued                interest converted to stock                        | $                422,400                                                    |                         | $                -                   |
|                                                                                                    | Fixed                assets purchased with options                        | $                375,000                                                    |                         | $                -                   |
|                                                                                                    | Fixed                assets purchased with exercise of warrants           | $                739,200                                                    |                         | $                -                   |
|                                                                                                    | Options                issued for investment in joint venture             | $                6,993,931                                                  |                         | $                -                   |
|                                                                                                    | Stock                issued for Unifide acquisition                       | $                -                                                          |                         | $                1,050,000           |
|                                                                                                    | Stock                issued for Todays Way acquisition                    | $                -                                                          |                         | $                450,000             |
|                                                                                                    | Stock                issued for services                                  | $                25,000                                                     |                         | $                890,140             |
|                                                                                                    | Stock                issued for prepaid consulting fees                   | $                4,497,333                                                  |                         | $                -                   |
|                                                                                                    | Stock                issued for convertible debt                          | $                42,485                                                     |                         | $                -                   |
|                                                                                                    | Stock                issued for employment agreement                      | $                -                                                          |                         | $                42,500              |
|                                                                                                    | Stock                issued for equity development fees                   | $                -                                                          |                         | $                628,890             |
|                                                                                                    | Stock                issued for director fees                             | $                -                                                          |                         | $                45,000              |
|                                                                                                    | Stock                cancelled                                            | $                -                                                          |                         | $                (5,000)             |
|                                                                                                    | Unrealized                securities gain                                 | $                174,929                                                    |                         | $                -                   |

----

**Industrial      Enterprises of America, Inc.**

**Notes      to Interim Financial Statements**

**Note      1 - Basis of presentation**

**Note      2 - Restatement of financial statements due to accounting      error**

**Note      3 - Inventory**

| Raw                materials   | $                4,959,356 |
|--------------------------------|----------------------------|
| Work-in-process                | -                          |
| Finished                goods  | 1,188,396                  |
|                           |                       |
| Total                inventory | $                6,147,752 |

----

**Note      4 - Property and equipment**

|                                                           |   | December                31, 2006 |   | December                31, 2005 |
|----------------------------------------------------------------|--------|----------------------------------|--------|----------------------------------|
| Plant                & equipment                           |   | $                6,632,898       |   | $                385,361         |
| Office                equipment                                |   | 210,680                          |   | 49,072                           |
| Vehicles                                                       |   | 153,983                          |   | 30,483                           |
| Leasehold                improvements                          |   | 3,307                            |   | 9,051                            |
| Land                                                           |   | 313,951                          |   | -                                |
| Building                                                       |   | 3,188,987                        |   | -                                |
| Less:                Accumulated depreciation and amortization |   | (1,132,665)                      |   | (127,911)                        |
| Net                fixed assets                                |   | $                9,371,141       |   | $                346,056         |

**Note      5 - Goodwill**

|                                                  | EMC                Pkg   |   | Unifide     |   | Today’s                Way |   | Spinwell                Holdings |   | Total                      |
|-------------------------------------------------------|--------------------------|--------|-------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------|
| Purchase                price                         | $                808,474 |   | $3,050,000  |   | $                950,000         |   | $4,000,000                       |   | $                8,808,474 |
| Less                assets acquired                   | (1,730,325)              |   | (4,959,477) |   | (399,257)                        |   | (11,716,799)                     |   | (18,805,858)               |
| Less                adjustment to fair market value   | 755,380                  |   | 429,968     |   | 186,032                          |   | (4,172,861)                      |   | (2,801,481)                |
| Add                liabilities assumed                | 1,339,880                |   | 5,017,960   |   | 441,783                          |   | 11,889,661                       |   | 18,689,284                 |
|                                                  |                     |   |        |   |                             |   |                             |   |                       |
| Costs                in excess of net assets acquired | $1,173,409               |   | $3,538,451  |   | $1,178,558                       |   | $                -               |   | $5,890,418                 |

**Note      6 - Earnings per share**

----

**Note      7 - Stock options and warrants**

| Options                Outstanding |   | Options                Exercisable |
|------------------------------------|--------|------------------------------------|
|                               |   |                               |   | Weighted                Average |   | Weighted                Average |   |   |
| Exercise                Prices     |   | Number                Outstanding  |   | Remaining                Contractual Life |   | Exercise                Prices |   | Number                Exercisable |
| $1.00                              |   | 18,750                             |   | 8.97                yrs |   | $1.00 |   | 18,750 |
| $1.30                              |   | 45,000                             |   | 8.93                yrs |   | $1.30 |   | 45,000 |
| $1.40                              |   | 5,000                              |   | 9.09                yrs |   | $1.40 |   | 5,000 |
| $2.00                              |   | 7,884                              |   | 7.84                yrs |   | $2.00 |   | 7,884 |
| $4.25                              |   | 42,150                             |   | 10.00                yrs |   | $4.25 |   | 42,150 |
| $6.00                              |   | 169,384                            |   | 9.83                yrs |   | $6.00 |   | 169,384 |

|                                              |   | For                the six months ended December 31, |
|---------------------------------------------------|--------|------------------------------------------------------|
|                                              |   | 2006                                                 |   | 2005                (restated) |
|                                              |   | Shares                                               |   | Weighted                Average Exercise Price |   | Shares |   | Weighted                Average Exercise Price |
| Options:                                          |   |                                                 |   |   |   |   |   |   |
| Outstanding                at beginning of period |   | 434,134                                              |   | $                1.93 |   | 472,500 |   | $                2.16 |
| Granted                                           |   | 1,020,000                                            |   | $                4.69 |   | 210,000 |   | $                1.06 |
| Exercised                                         |   | (1,165,966)                                          |   | $                3.41 |   | (25,000) |   | $                1.30 |
| Cancelled                                         |   | -                                                    |   | $                0.00 |   | - |   | $                0.00 |
| Outstanding                at end of period       |   | 288,168                                              |   | $                5.70 |   | 657,500 |   | $                1.84 |

|                            |   | Warrants                Outstanding |   | Warrants                Exercisable |
|---------------------------------|--------|-------------------------------------|--------|-------------------------------------|
| Range                of Warrant |   |                                |   | Weighted                Average     |   | Weighted                Average |   |   |   | Weighted                Average |
| Exercise                Prices  |   | Number                of Warrants   |   | Exercise                Price       |   | Remaining                Contractual Life |   | Number                of Warrants |   | Exercise                Price |
| $1.20                           |   | 20,000                              |   | $1.20                               |   | 5.41                yrs |   | 20,000 |   | $1.20 |
| $1.75                           |   | 350,835                             |   | $1.75                               |   | 3.86                yrs |   | 350,835 |   | $1.75 |
| $1.82                           |   | 62,386                              |   | $1.82                               |   | 3.55                yrs |   | 62,385 |   | $1.82 |
| $2.00                           |   | 14,495                              |   | $2.00                               |   | 3.08                yrs |   | 14,495 |   | $2.00 |
| $2.40                           |   | 369,364                             |   | $2.40                               |   | 2.10                yrs |   | 369,364 |   | $2.40 |
| $2.50                           |   | 12,500                              |   | $2.50                               |   | 3.45                yrs |   | 12,500 |   | $2.50 |
| $2.85                           |   | 602,367                             |   | $2.85                               |   | 3.55                yrs |   | 602,367 |   | $2.85 |
| $3.00                           |   | 64,012                              |   | $3.00                               |   | 3.53                yrs |   | 64,012 |   | $3.00 |
| $3.30                           |   | 115,000                             |   | $3.30                               |   | 5.09                yrs |   | 115,000 |   | $3.30 |
| $3.40                           |   | 461,631                             |   | $3.40                               |   | 2.13                yrs |   | 461,361 |   | $3.40 |
| $5.00                           |   | 310,000                             |   | $5.00                               |   | 4.00                yrs |   | 310,000 |   | $5.00 |

----

|                                            |   | Number                of Warrants |   | Weighted                Average Exercise Price |   | Warrants                Exercisable |   | Weighted                Average Exercise Price |
|-------------------------------------------------|--------|-----------------------------------|--------|------------------------------------------------|--------|-------------------------------------|--------|------------------------------------------------|
|                                            |   |                              |   |                                           |   |                                |   |                                           |
| Outstanding                at June 30, 2006     |   | 6,202,826                         |   | $                2.77                          |   | 6,202,826                           |   | $                2.77                          |
| Warrants                cancelled               |   | -                                 |   | $                0.00                          |   | -                                   |   | $                0.00                          |
| Warrants                exercised               |   | (3,820,235)                       |   | $                3.23                          |   | (3,820,235)                         |   | $                3.23                          |
| Warrants                granted                 |   | -                                 |   | $                0.00                          |   | -                                   |   | $                0.00                          |
| Outstanding                at December 31, 2006 |   | 2,382,590                         |   | $                2.03                          |   | 2,382,590                           |   | $                2.03                          |

**Note      8- Interest expense**

**Note      9 - Debt issuances**

**Note      10 - Related party transactions**

|                                                                                                                                                                | December                31, 2006 |   | December                31, 2005 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|--------|----------------------------------|
| Shareholders,                unsecured, 18% interest, due October 26, 2005                                                                                          | $                -               |   | $                50,000          |
| Shareholders,                unsecured, 5% interest per month, due July 15, 2005                                                                                    | -                                |   | 350,000                          |
| Shareholders,                unsecured, 18% interest, due October 30, 2007                                                                                          | -                                |   | 400,000                          |
| Shareholders,                unsecured, 18% interest, due November 3, 2007                                                                                          | -                                |   | 50,000                           |
| Shareholders,                unsecured, 18% interest, due November 16, 2007                                                                                         | -                                |   | 50,000                           |
| Shareholders,                unsecured, 18% interest, due November 26, 2007                                                                                         | -                                |   | 50,000                           |
| Shareholders,                unsecured, 8% interest, due December 1, 2007                                                                                           | 886,183                          |   | 1,387,626                        |
| Shareholders,                unsecured, 12% interest, due January 30, 2006                                                                                          | -                                |   | 170,000                          |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due July 19, 2007      | 728,100                          |   | -                                |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due September 8, 2008  | 477,262                          |   | -                                |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due September 14, 2008 | 79,734                           |   | -                                |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due November 2, 2007   | 500,000                          |   | -                                |
| Shareholders,                secured with certain Company assets, Wall StreetPrime                plus 4%, due July 27, 2008                                        | 3,027,000                        |   | -                                |
| Shareholders,                unsecured, 24% interest, due October 20, 2006(Note                was paid in full as of December 31, 2006)                            | 49,000                           |   | -                                |
| Related                party, 8% interest, due upon demand                                                                                                          | 412,475                          |   | -                                |
|                                                                                                                                                                |                             |   |                             |
| Total                debt                                                                                                                                           | 6,159,754                        |   | 2,507,626                        |
| Less:                current potion                                                                                                                                 | (2,575,758)                      |   | (474,449)                        |
| Long                term portion                                                                                                                                    | $3,583,996                       |   | $2,033,177                       |

----

**Note      11 - Changes in common shares outstanding**

|                                                          | Common     |
|---------------------------------------------------------------|------------|
|                                                          | Shares     |
| Outstanding                common shares at June 30, 2006     | 5,944,586  |
| Debt                converted to stock                        | 700,407    |
| Warrants                converted to stock                    | 1,632,715  |
| Options                converted to stock                     | 667,250    |
| Stock                issued for cash                          | 2,679,239  |
| Stock                issued for services                      | 919,425    |
| Outstanding                common shares at December 31, 2006 | 12,543,622 |

**Note      12 - Investment in common stock**

|                                                                         |   | Less                Than 12 Months    |   | 12                Months or More       |   | Total                                 |
|------------------------------------------------------------------------------|--------|---------------------------------------|--------|----------------------------------------|--------|---------------------------------------|
| Description                of Securities                                     |   |   Fair                Value |   |  Unrealized                losses |   |   Fair                Value |   |  Unrealized                losses |   |   Fair                Value |   |  Unrealized                losses |
| Investments                in equity securities carried at fair market value |   | $-                                    |   | -                                      |   | $609,230                              |   | $2,323,957 |   | $609,230 |   | $2,323,957 |

*Disclosures      about Fair Value of Financial Instruments*

----

**Note      13 - Gain on sale of securities**

**Note      14 - Unrealized securities losses**

**Note      15- Disputed liabilities and cancellation of debt**

**Note      16 - Commitments and contingencies**

----

**Note      17 - Proforma Balance Sheet and Statement of Operations for the six months      ended      December 31, 2006 and 2005.**

|                             | **IEAM**                             | **EMC**                              | **UNIFIDE**                          | **TODAYS                WAY**        | **SPINWELL                HOLDING**  |                      | **COMBINED**                         |
|----------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|---------------------------|--------------------------------------|
|                             | **December                31, 2005** | **December                31, 2005** | **December                31, 2005** | **December                31, 2005** | **December                31, 2005** | **Elimination**           | **December                31, 2005** |
|                             |                                 |                                 |                                 |                                 |                                 |                      |                                 |
| Total                assets      | $8,972,615                           | $2,699,885                           | $6,691,272                           | $366,622                             | $11,347,802                          | $(1,530,707)              | $28,547,789                          |
|                             |                                 |                                 |                                 |                                 |                                 |                      |                                 |
| Total                liabilities | $4,235,618                           | $1,209,130                           | $5,860,712                           | $412,868                             | $9,318,515                           | $                (86,074) | $20,950,769                          |

|                                                       | **IEAM**                                              |   | **EMC**                                               |   | **UNIFIDE**                                           |   | **TODAY'S                WAY**                        |   | **SPINWELL                HOLDING**                   |   |             |   | **COMBINED**                                          |
|------------------------------------------------------------|-------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------------------|--------|------------------|--------|-------------------------------------------------------|
|                                                       | **Six                months ended December 31, 2005** |   | **Six                months ended December 31, 2005** |   | **Six                months ended December 31, 2005** |   | **Six                months ended December 31, 2005** |   | **Six                months ended December 31, 2005** |   | **Eliminations** |   | **Six                months ended December 31, 2005** |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Net                sales                                   | $                -                                    |   | $3,103,917                                            |   | $7,432,266                                            |   | $                83,135                               |   | 19,766,842                                            |   | $(67,745)        |   | 30,318,415                                            |
| Cost                of goods sold                          | -                                                     |   | 2,453,364                                             |   | 5,333,830                                             |   | 25,691                                                |   | 18,531,388                                            |   | (67,745)         |   | 26,276,528                                            |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Gross                profit                                | -                                                     |   | 650,553                                               |   | 2,098,436                                             |   | 57,444                                                |   | 1,235,454                                             |   |             |   | 4,041,887                                             |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Selling                & admin                         | 134,053                                               |   | 202,965                                               |   | 1,353,514                                             |   | 42,451                                                |   | 826,978                                               |   |             |   | 2,559,961                                             |
| Doubtful                account expense                    | -                                                     |   | -                                                     |   | -                                                     |   | -                                                     |   | -                                                     |   |             |   | -                                                     |
| Salaries                & contract labor               | -                                                     |   | 78,000                                                |   | 215,211                                               |   | -                                                     |   | 404,778                                               |   |             |   | 697,989                                               |
| Depreciation                & amortization             | 74,732                                                |   | 8,723                                                 |   | 18,677                                                |   | 17,034                                                |   | 78,796                                                |   |             |   | 197,962                                               |
| Legal                & professional                    | 394,219                                               |   | 19,147                                                |   | 57,601                                                |   | -                                                     |   | 126,436                                               |   |             |   | 597,403                                               |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Total                expenses                              | 603,004                                               |   | 308,835                                               |   | 1,645,003                                             |   | 59,485                                                |   | 1,436,988                                             |   |             |   | 4,053,315                                             |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Net                income (loss) from operations           | (603,004)                                             |   | 341,718                                               |   | 453,433                                               |   | (2,041)                                               |   | (201,534)                                             |   |             |   | (11,428)                                              |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Miscellaneous                income                        | 506,788                                               |   | 7,369                                                 |   | 2,373                                                 |   | 537                                                   |   | -                                                     |   |             |   | 517,067                                               |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Interest                expense                            | (1,245,316)                                           |   | (178,004)                                             |   | (114,430)                                             |   | (2,216)                                               |   | (258,782)                                             |   |             |   | (1,798,748)                                           |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Net                income (loss) before income tax expense | (1,341,532)                                           |   | 171,083                                               |   | 341,376                                               |   | (3,720)                                               |   | (460,316)                                             |   |             |   | (1,293,109)                                           |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Income                tax expense                          | -                                                     |   | -                                                     |   | -                                                     |   | -                                                     |   | -                                                     |   |             |   | -                                                     |
|                                                       |                                                  |   |                                                  |   |                                                  |   |                                                  |   |                                                  |   |             |   |                                                  |
| Net                income (loss)                           | $(1,341,532)                                          |   | $                171,083                              |   | $                341,376                              |   | $                (3,720)                              |   | $(460,316)                                            |   |             |   | $(1,293,109)                                          |

----

|                             | **IEAM**                             | **EMC**                              | **UNIFIDE**                          | **TODAYS                WAY**        | **SPINWELL                HOLDING**  |                       | **COMBINED**                         |
|----------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|----------------------------|--------------------------------------|
|                             | **December                31, 2006** | **December                31, 2006** | **December                31, 2006** | **December                31, 2006** | **December                31, 2006** | **Elimination**            | **December                31, 2006** |
|                             |                                 |                                 |                                 |                                 |                                 |                       |                                 |
| Total                assets      | $35,168,889                          | $3,131,323                           | $6,906,086                           | $343,510                             | $19,340,318                          | $(13,570,198)              | $51,319,928                          |
|                             |                                 |                                 |                                 |                                 |                                 |                       |                                 |
| Total                Liabilities | $                4,484,797           | $1,264,256                           | $                955,063             | $                38,165              | $12,991,786                          | $                (849,809) | $18,884,258                          |

|                                                       | **IEAM**                                              | **EMC**                                               | **UNIFIDE**                                           | **TODAY'S                WAY**                        | **SPINWELL                HOLDING**                   |                     | **COMBINED**                                          |
|------------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|--------------------------|-------------------------------------------------------|
|                                                       | **Six                months ended December 31, 2006** | **Six                months ended December 31, 2006** | **Six                months ended December 31, 2006** | **Six                months ended December 31, 2006** | **Six                months ended December 31, 2006** | **Elimination**          | **Six                months ended December 31, 2006** |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Net                sales                                   | $                -                                    | $3,598,590                                            | $10,352,334                                           | $                -                                    | $13,065,615                                           | $                -       | $27,016,539                                           |
| Cost                of goods sold                          | -                                                     | 2,515,319                                             | 1,803,228                                             | -                                                     | 16,150,991                                            | (266,182)                | 20,203,356                                            |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Gross                profit                                | -                                                     | 1,083,271                                             | 8,549,106                                             | -                                                     | (3,085,376)                                           | 266,182                  | 6,813,183                                             |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Total                expenses                              | 647,318                                               | 638,627                                               | 1,074,318                                             | -                                                     | 2,080,372                                             | 1,125                    | 4,441,760                                             |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Net                income (loss) from operations           | (647,318)                                             | 444,644                                               | 7,474,788                                             | -                                                     | (5,165,748)                                           | 265,057                  | 2,371,423                                             |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Interest                expense                            | (4,757,299)                                           | (34,803)                                              | (23,959)                                              | -                                                     | (444,404)                                             |                     | (5,260,465)                                           |
| Foreign                exchange losses                     | -                                                     | -                                                     | -                                                     | -                                                     | (21,891)                                              |                     | (21,891)                                              |
| Gain                sale of securities                     | 64,335                                                | -                                                     | -                                                     | -                                                     | -                                                     |                     | 64,335                                                |
| Equipment                and realty option revenues        | 1,375,000                                             | -                                                     | -                                                     | -                                                     | -                                                     |                     | 1,375,000                                             |
| Litigation                settlement revenues              | 1,045,739                                             | -                                                     | -                                                     | -                                                     | -                                                     |                     | 1,045,739                                             |
| Miscellaneous                income                        | 1,783                                                 | 13                                                    | -                                                     | -                                                     | 32,994                                                |                     | 34,789                                                |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Net                income (loss) before income tax expense | (2,917,760)                                           | 409,854                                               | 7,450,829                                             | -                                                     | (5,599,049)                                           | 265,057                  | (391,069)                                             |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Income                tax expense                          | -                                                     | -                                                     | -                                                     | -                                                     | -                                                     |                     | -                                                     |
|                                                       |                                                  |                                                  |                                                  |                                                  |                                                  |                     |                                                  |
| Net                income (loss)                           | $(2,917,760)                                          | $                409,854                              | $                7,450,829                            | $                -                                    | $(5,599,049)                                          | $                265,057 | $(391,069)                                            |

**Note      18 - Subsequent events**

----

**Item      2. Management’s Discussion and Analysis or Plan of      Operations.**

*Three      Months Ended December 31, 2006 as Compared to Three Months Ended December 31,      2005 *

***Liquidity      and Capital Resources***

----

**Item      3. Controls and Procedures.**

***Evaluation      of Disclosure Controls and Procedures***

***Changes      in Internal Controls***

**PART      II**

**Item      1. Legal Proceedings.**

** **

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds.**

----

**Item      3. Defaults Upon Senior Securities.**

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

**Item      5. Other Information.**

----

**Item      6. Exhibits.**

***Exhibit      Index***

| 31.1 | Certification                of the Principal Executive Officer pursuant to Rule                13a-14(a). |
|------|------------------------------------------------------------------------------------------------------------|
| 31.2 | Certification                of the Principal Financial Officer pursuant to Rule                13a-14(a). |
| 32.1 | Section                1350 Certification of the Chief Executive Officer.                                  |
| 32.2 | Section                1350 Certification of the Chief Financial                Officer.                   |

----

**Signatures**

**Industrial      Enterprises of America, Inc**

**February      15**
**      2007**

**February      15**
**      2007**