**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**

**March      31, 2007**

**[      ] 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                                                                                                                                                                      |                  1   |
| **Part                I**                                                                                                                                                                                    |                                |
| Item                1. Financial Statements.................................................................                         |                   1       |
| Item                2. Management’s Discussion and Analysis or Plan of Operations                ............                                                                          |  16                            |
| Item                3. Controls and Procedures............................................................                                   |  17                            |
|                                                                                                                                                                                                         |                                |
| **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                            |
|                                                                                                                                                                                                         |                                |
|                                                                                                                                                                                                         |                                |

----

**Recent      Developments**

**Item      1. Financial Statements.**

***Critical      Accounting Policies***

**Revenue      Recognition**

**Page          1**

----

**Inventory**

**Machinery      and Equipment**

**Accounting      for Stock-Based Compensation**

**Accounting      for Income Tax Uncertainties**

**Page          2**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Balance Sheet**

**March      31, 2007**

**(Unaudited)**

|                        |                                                                         |                                                             |       |   |      | **March                31, 2007** |
|-----------------------------|------------------------------------------------------------------------------|------------------------------------------------------------------|------------|--------|-----------|-----------------------------------|
| ASSETS                      |                                                                         |                                                             |       |   |
|                        | Current                Assets                                                |                                                             |       |
|                        |                                                                         | Cash                                                             |       |   | 1,639,695 |
|                        |                                                                         | Accounts                receivable, net of allowance of $462,065 | 13,497,730 |
|                        |                                                                         | Due                from related parties                          | 358,166    |
|                        |                                                                         | Inventory                                                        | 6,550,753  |
|                        |                                                                         | Notes                receivable                                  | 1,357,576  |
|                        |                                                                         | Prepaid                expenses                                  | 4,331,481  |
|                        | Total                Current Assets                                          | $27,735,401                                                      |
|                        | Investment                in common stock                                    | 1,080,426                                                        |
|                        | Property,                plant and equipment net of accumulated depreciation | 9,165,731                                                        |
|                        | Investment                in joint venture                                   | 6,262,157                                                        |
|                        | Other                Assets                                                  | 152,979                                                          |
|                        | Other                intangibles, net of amortization                        | 184,270                                                          |
|                        | Debt                issuance costs, net of amortization                      | 155,504                                                          |
|                        | Goodwill                                                                     | 5,740,229                                                        |
| TOTAL                ASSETS | $50,476,697                                                                  |

**Page            3**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Balance Sheet**

**March      31, 2007**

**(Unaudited)**

| LIABILITIES                & SHAREHOLDERS' EQUITY       |
|-------------------------------------------------------------|
|                                                        | Current                Liabilities |   |
|                                                        |   | Accounts                payable | $                6,033,467 |
|                                                        |   | Payable                related parties | 128,214 |
|                                                        |   | Accrued                payables | 421,194 |
|                                                        |   | Accrued                interest | 308,236 |
|                                                        |   | Accrued                interest to shareholders and related parties | 89,771 |
|                                                        |   | Current                maturities of long term debt | 6,479,525 |
|                                                        |   | Deferred                gain sale leaseback | 66,111 |
|                                                        | Total                Current Liabilities | $13,526,518 |
|                                                        | Long                Term Liabilities |   |
|                                                        |   | Notes                payable net of current debt | 617,756 |
|                                                        |   | Convertible                notes payable | 710,120 |
|                                                        |   | Notes                payable related parties | 5,481,177 |
|                                                        |   | Due                to related parties | 80,403 |
|                                                        |   | Leases                payable | 187,327 |
|                                                        |   | Discount                on notes payable | (2,749,304) |
|                                                        | Total                Long Term Liabilities | $                4,327,479 |
|                                                        | Total                Liabilities |   | $17,853,997 |
|                                                        | Shareholders'                Equity |   |
|                                                        |   | Preferred                stock, $0.001 par value, |   |
|                                                        |   |   | 10,000,000                shares authorized; -0- shares issued and |   |
|                                                        |   |   | outstanding                as of March 31, 2007 | $                - |
|                                                        |   | Common                stock, $0.001 par value, |   |
|                                                        |   |   | 150,000,000                shares authorized; 14,148,300 shares issued and |   |
|                                                        |   |   | outstanding                as of March 31, 2007 | 141,483 |
|                                                        |   | Additional                paid-in capital | 54,594,425 |
|                                                        |   | Inv                Trns CL A/C Corp Gen | 62,222 |
|                                                        |   | Subscribed                stock payable | 5,834 |
|                                                        |   | Shareholder                receivable | (6,000) |
|                                                        |   | Equity                development fees, unamortized | (397,349) |
|                                                        |   | Unrealized                securities gains (losses) | (1,646,762) |
|                                                        |   | Treasury                Stock | (1,109,347) |
|                                                        |   | Retained                (deficit) | (19,021,806) |
|                                                        | Total                Shareholders' Equity | $32,622,700 |
| TOTAL                LIABILITIES & SHAREHOLDERS' EQUITY | $50,476,697 |

**Page            4**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Consolidated      Statements of Operations**

**(Unaudited)**

|                                                                  |                                                       |                           |                         | **Three                  Months Ended** |                           | **Nine                  Months Ended**          |
|-----------------------------------------------------------------------|------------------------------------------------------------|--------------------------------|------------------------------|-----------------------------------------|--------------------------------|-------------------------------------------------|
|                                                                  |                                                       |                           |                         | **3/31/2007**                           |                           | **Mar                  31, 2006****(restated)** |   | **3/31/2007** |   | **Mar                  31, 2006****(restated)** |
| Revenues                                                              |                                                       | $                  17,624,713  |                         | $                  9,015,508            |                           | $                  41,604,813                   |   | $                  19,567,081 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Cost                  of Goods Sold                                   |                                                       | 13,706,544                     |                         | 8,557,127                               |                           | 30,210,106                                      |   | 16,302,267 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
|                                                                  |  Writedown                of Inventory                |                           | -                            |                                    | 2,400,000                      |                                            | - |   | 2,400,000 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Gross                  Profit                                         |                                                       | $                  3,918,169   |                         | $                  (1,941,619)          |                           | $                  11,394,707                   |   | $                  864,814 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Expenses:                                                             |                                                       |                           |                         |                                    |                           |                                            |   |   |
|                                                                  |  Selling,                general & administrative |                           | 1,147,478                    |                                    | 534,359                        |                                            | 4,400,328 |   | 2,403,874 |
|                                                                  |  Salaries                and contract labor           |                           | -                            |                                    | 1,002,708                      |                                            | - |   | 1,422,995 |
|                                                                  |  Depreciation                  and amortization       |                           | 713,643                      |                                    | 246,882                        |                                            | 1,621,236 |   | 370,839 |
|                                                                  |  Legal                  and professional fees         |                           | (78,300)                     |                                    | 630,488                        |                                            | 203,018 |   | 1,323,267 |
|                                                                  |  Operations                and consolidation expense  |                           |                         |                                    | 250,000                        |                                            |   |   | 250,000 |
|                                                                  |  Total                Expenses                        |                           | $                  1,782,821 |                                    | $                  2,664,437   |                                            | $                  6,224,582 |   | $                  5,770,975 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
|                                                                  |  Income                (loss) from operations         |                           | $                  2,135,348 |                                    | $                  (4,606,056) |                                            | $                  5,170,125 |   | $                  (4,906,161) |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Other                  income (expense)                               |                                                       |                           |                         |                                    |                           |                                            |   |   |
| Interest                  income                                      |                                                       | 52,404                         |                         | -                                       |                           | 52,404                                          |   | - |
| Interest                  expense                                     |                                                       | (8,358,182)                    |                         | (2,253,068)                             |                           | (14,284,064)                                    |   | (3,028,670) |
| Gain                  (loss) from sale of securities                  |                                                       | (100,648)                      |                         | 27,024                                  |                           | (36,313)                                        |   | 533,802 |
| Litigation                  settlement revenues                       |                                                       | -                              |                         | -                                       |                           | 1,045,739                                       |   | - |
| Equipment                  and realty option revenues                 |                                                       | -                              |                         | -                                       |                           | 375,000                                         |   | - |
| Gain                  on disposition of plant and facilities          |                                                       | 42,026                         |                         | -                                       |                           | 1,042,026                                       |   | - |
| Loan                  Fees                                            |                                                       | (49,070)                       |                         | -                                       |                           | (49,070)                                        |   | - |
| Miscellaneous                  income (expense)                       |                                                       | (29,982)                       |                         | (1,662)                                 |                           | (17,083)                                        |   | 8,627 |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Net                  income (loss)                                    |                                                       | $                  (6,308,104) |                         | $                  (6,833,762)          |                           | $                  (6,701,236)                  |   | $                  (7,392,402) |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Net                  income (loss) per share basic and diluted        |                                                       | $                  (0.47)      |                         | $                  (1.60)               |                           | $                  (0.67)                       |   | $                  (1.61) |
|                                                                  |                                                       |                           |                         |                                    |                           |                                            |   |   |   |   |
| Weighted                  average number of common shares outstanding |                                                       | 13,355,368                     |                         | 4,276,915                               |                           | 9,932,967                                       |   | 4,602,476 |

**Page            5**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Statements      of Cash Flows**

**(Unaudited)**

|                                                                                                        |                                                                        |                                                       |                             | **Nine                  Months Ended** |
|-------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|------------------------------------------------------------|----------------------------------|----------------------------------------|
|                                                                                                        |                                                                        |                                                       |                             | **March                  31, 2007**    |   | **March                  31, 2006 (restated)** |
| **Operating                  activities**                                                                   |                                                                        |                                                       |                             |
|                                                                                                        | Net                  income (loss)                                          | $                  (6,701,236)                             |                             | $                  (7,392,402)         |
|                                                                                                        | Non-cash                  items                                             |                                                       |                             |                                   |
|                                                                                                        |                                                                        | Depreciation                  and amortization             | 1,621,236                        |                                   | 527,219 |
|                                                                                                        |                                                                        | Amortization                  of debt issuance costs       | 1,155,603                        |                                   | - |
|                                                                                                        |                                                                        | Amortization                  of debt discount             | 12,723,608                       |                                   | - |
|                                                                                                        |                                                                        | Gain                  on settlement of litigation          | (1,045,739)                      |                                   | - |
|                                                                                                        |                                                                        | Deferred                  gain sale leaseback              | (11,667)                         |                                   | - |
|                                                                                                        |                                                                        | Equipment                  option settled to debt          | (375,000)                        |                                   | - |
|                                                                                                        |                                                                        | Real                  estate option income settled to debt | (1,000,000)                      |                                   | - |
|                                                                                                        |                                                                        | Stock                  based compensation                  | 1,012,319                        |                                   | 938,602 |
|                                                                                                        |                                                                        | Stock                  based charitable donations          | 16,100                           |                                   | - |
|                                                                                                        |                                                                        | Amortization                  of equity development fees   | 41,654                           |                                   | - |
|                                                                                                        |                                                                        | Stock                  based interest expense              | -                                |                                   | 1,859,150 |
|                                                                                                        |                                                                        | Stock                  sales for notes receivable          | -                                |                                   | (451,425) |
|                                                                                                        | (Loss)                  on sale of Power3 shares                            | (36,313)                                                   |                             | -                                      |
|                                                                                                        | Net                  changes in working capital accounts                    |                                                       |                             |                                   |
|                                                                                                        | Accounts                  receivable                                        | (7,624,361)                                                |                             | 1,284,477                              |
|                                                                                                        | Other                  receivable                                           | (6,786)                                                    |                             | (48,750)                               |
|                                                                                                        | Interest                  receivable                                        | (50,221)                                                   |                             | -                                      |
|                                                                                                        | Related                  party receivable                                   | -                                                          |                             | 197,484                                |
|                                                                                                        | Prepaid                  expenses                                           | 162,278                                                    |                             | (104,947)                              |
|                                                                                                        | Notes                  receivable security sales                            | -                                                          |                             | (500,000)                              |
|                                                                                                        | Inventory                                                                   | 2,086,616                                                  |                             | 888,831                                |
|                                                                                                        | Other                  current assets                                       | (262,927)                                                  |                             | 29,590                                 |
|                                                                                                        | Accounts                  payable                                           | (1,247,753)                                                |                             | 1,994,746                              |
|                                                                                                        | Related                  party payable                                      | (39,079)                                                   |                             | 396,750                                |
|                                                                                                        | Accrued                  interest                                           | (114,721)                                                  |                             | 407,362                                |
|                                                                                                        | Accrued                  interest related parties                           | -                                                          |                             | (1,365)                                |
|                                                                                                        | Current                  notes payable related party                        | -                                                          |                             | (232,340)                              |
|                                                                                                        | Accrued                  expenses                                           | -                                                          |                             | (472,670)                              |
|                                                                                                        | Other                  payables                                             | -                                                          |                             | (74,997)                               |
|                                                                                                        |                                                                        |                                                       |                             |                                   |
|                                                                                                        | **Net                  cash (used) by operating activities**                | **$                  303,611**                             |                             | **$                  (754,685)**       |
| **Investing                  activities**                                                                   |                                                                        |                                                       |                             |
|                                                                                                        | Additions                  to property, plant and equipment                 | (1,238,648)                                                |                             | (234,890)                              |
|                                                                                                        | Proceeds                  from sale of Power3 Medical Products stock        | 82,981                                                     |                             | 55,988                                 |
|                                                                                                        | Due                  from related parties                                   | 17,575                                                     |                             | -                                      |
|                                                                                                        | Deferred                  gain on sale leaseback                            | 77,778                                                     |                             | -                                      |
|                                                                                                        | Investment                  in target - First Defense                       | (451,970)                                                  |                             | -                                      |
|                                                                                                        | Investment                  in China joint venture                          | (731,779)                                                  |                             | -                                      |
|                                                                                                        | Investment                  in subsidiaries                                 | -                                                          |                             | (7,742,597)                            |
|                                                                                                        | Goodwill                                                                    | (795,600)                                                  |                             | -                                      |
|                                                                                                        | Notes                  receivable                                           | (225,860)                                                  |                             | -                                      |
|                                                                                                        | Due                  from related parties                                   | (35,289)                                                   |                             | -                                      |
|                                                                                                        | Shareholder                  receivable                                     | (100,000)                                                  |                             | -                                      |
|                                                                                                        |                                                                        |                                                       |                             |                                   |
|                                                                                                        | **Net                  cash (used) by investing activities**                | **$                  (3,400,812)**                         |                             | **$                  (7,921,499)**     |
| **Financing                  activities**                                                                   |                                                                        |                                                       |                             |
|                                                                                                        | Proceeds                  from issuance of debt                             | 75,767                                                     |                             | $                  26,474,828          |
|                                                                                                        | Principal                  payments on debt                                 | (759,965)                                                  |                             | (18,451,888)                           |
|                                                                                                        | Proceeds                  from revolving line of credit                     | 32,728,595                                                 |                             | -                                      |
|                                                                                                        | Payments                  on revolving line of credit                       | (33,573,887)                                               |                             | -                                      |
|                                                                                                        | Payments                  for notes payable                                 | (455,074)                                                  |                             | -                                      |
|                                                                                                        | Proceeds                  from notes payable related party and shareholders | -                                                          |                             | 1,129,918                              |
|                                                                                                        | Payments                  on related party loans                            | -                                                          |                             | (1,250,442)                            |
|                                                                                                        | Proceeds                  from issuance of common stock                     | 5,853,020                                                  |                             | 295,690                                |
|                                                                                                        | Proceeds                  from exercise of stock options                    | 237,639                                                    |                             | -                                      |
|                                                                                                        | Proceeds                  from stock subscriptions                          | 672,608                                                    |                             | -                                      |
|                                                                                                        | Payments                  for treasury stock                                | (100,182)                                                  |                             | -                                      |
|                                                                                                        | Payments                  for cancellation of warrants                      | (250,000)                                                  |                             | -                                      |
|                                                                                                        | Subscribed                  stock                                           | -                                                          |                             | 410,000                                |
|                                                                                                        | Equity                  development fees                                    | -                                                          |                             | (161,000)                              |
|                                                                                                        | **Net                  cash provided by Financing Activities**              | **$                  4,428,521**                           |                             | **$                  8,447,106**       |
| **Net                  cash increase for period**                                                           | **1,331,320**                                                               |                                                       | **$                  (229,078)** |
| Cash                  at beginning of period                                                                | 308,375                                                                     |                                                       | 354,583                          |
| **Cash                  at end of period**                                                                  | **$                  1,639,695**                                            |                                                       | **$                  125,505**   |
|                                                                                                        |                                                                        |                                                       |                             |                                   |   |   |
| **SUPPLEMENTAL                  DISCLOSURES RELATED TO CASH FLOWS:**                                        |                                                                        |                                                       |                             |
|                                                                                                        | Interest                  paid                                              | $1,460,004                                                 |                             | $                  987,293             |
|                                                                                                        |                                                                        |                                                       |                             |                                   |   |   |
| **SUPPLEMENTAL                  SCHEDULE OF NON-CASH INVESTING AND FINANCING                  ACTIVITIES:** |                                                                        |                                                       |
|                                                                                                        | Notes                  receivable for Power3 Medical Products stock sales   | $                  30,000                                  |                             | $                  500,000             |
|                                                                                                        | Notes                  payable for Unifide and Todays Way acquisition       | $                  -                                       |                             | $                  3,750,000           |
|                                                                                                        | Debt                  converted to common stock                             | $                  2,725,519                               |                             | $                  86,319              |
|                                                                                                        | Litigation                  settlement for convertible debt                 | $                  2,042,760                               |                             | $                  -                   |
|                                                                                                        | Accrued                  interest converted to stock                        | $                  564,062                                 |                             | $                  469,796             |
|                                                                                                        | Fixed                  assets purchased with options                        | $                  375,000                                 |                             | $                  -                   |
|                                                                                                        | Fixed                  assets purchased with exercise of warrants           | $                  739,200                                 |                             | $                  -                   |
|                                                                                                        | Stock                  issued for EMC                                       | $                  -                                       |                             | $                  -                   |
|                                                                                                        | Stock                  issued for Unifide acquisition                       | $                  -                                       |                             | $                  1,050,000           |
|                                                                                                        | Stock                  issued for Todays Way acquisition                    | $                  -                                       |                             | $                  450,000             |
|                                                                                                        | Stock                  issued for Fire First Defense acquisition            | $                  786,074                                 |                             | $                  -                   |
|                                                                                                        | Stock                  issued for services                                  | $                  757,600                                 |                             | $                  1,638,372           |
|                                                                                                        | Stock                  issued for prepaid consulting fees                   | $4,497,333                                                 |                             | $                  -                   |
|                                                                                                        | Stock                  issued for employment agreement                      | $                  -                                       |                             | $                  42,500              |
|                                                                                                        | Stock                  issued for equity development fees                   | $                  -                                       |                             | $                  2,525,343           |
|                                                                                                        | Stock                  issued for director fees                             | $                  -                                       |                             | $                  73,500              |
|                                                                                                        | Stock                  cancelled                                            | $                  -                                       |                             | $                  (5,000)             |

**Page            6**

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**Note      1 - Basis of presentation**

**Note      2 - Recent accounting pronouncements**

**Note      3 - Restatement of financial statements due to accounting      error**

**Page          7**

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**Note      4 - Inventory**

| Raw                materials   | $                1,748,926 |
|--------------------------------|----------------------------|
| Work-in-process                | -                          |
| Finished                goods  | 4,801,827                  |
|                           |                       |
| Total                inventory | $                6,550,753 |

**Note      5 - Property and equipment**

|                                                           |   | March                31, 2007 |   | March                31, 2006 |   |
|----------------------------------------------------------------|--------|-------------------------------|--------|-------------------------------|--------|
| Plant                & equipment                           |   | $                6,622,710    |   | $                7,161,458    |   |
| Office                equipment                                |   | 207,092                       |   | 130,089                       |   |
| Vehicles                                                       |   | 120,982                       |   | 30,483                        |   |
| Leasehold                improvements                          |   | 1,205,994                     |   | 3,412,382                     |   |
| Land                                                           |   | 313,951                       |   | -                             |   |
| Building                                                       |   | 2,174,990                     |   | -                             |   |
| Less:                Accumulated depreciation and amortization |   | (1,479,988)                   |   | (219,379)                     |   |
| Net                fixed assets                                |   | $                9,165,731    |   | $10,515,033                   |   |

**Page          8**

----

**Note      6 - Goodwill**

|                                                  | EMC                      |   | Unifide     |   | Todays                   |   | Spinwell           |   | 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      7 - Earnings per share**

**Page          9**

----

**Note      8 - Stock options and warrants**

|                           |   | Options                Outstanding |   | Options                Exercisable |
|--------------------------------|--------|------------------------------------|--------|------------------------------------|
|                           |   |                               |   | Weighted                Average    |   |   |   |   |
| Range                of        |   |                               |   | Remaining                          |   | Weighted                Average |   | Number |
| Exercise                Prices |   | Number                Outstanding  |   | Contractual                Life    |   | Exercise                Prices |   | Exercisable |
| $1.00                - $6.00   |   | 201,018                            |   | 9.12                yrs            |   | $5.03 |   | 201,018 |
|                           |   |                               |   |                               |   |   |   |   |

|                                              |   | For                the nine months ended March 31, |
|---------------------------------------------------|--------|----------------------------------------------------|
|                                              |   | 2007                                               |   | 2006                (restated) |
|                                              |   | Shares                                             |   | Weighted                Average Exercise Price |   | Shares |   | Weighted                Average Exercise Price |
|                                              |   |                                               |   |   |   |   |   |   |
| Outstanding                at beginning of period |   | 132,884                                            |   | $                1.94 |   | 472,500 |   | $                2.16 |
| Granted                                           |   | 1,020,000                                          |   | $                4.69 |   | 415,000 |   | $                1.51 |
| Exercised                                         |   | (951,866)                                          |   | $                3.77 |   | (73,750) |   | $                1.00 |
| Cancelled                                         |   | -                                                  |   | $                0.00 |   | - |   | $                0.00 |
| Outstanding                at end of period       |   | 201,018                                            |   | $                5.03 |   | 813,750 |   | $                1.93 |

|                           |   | Warrants                Outstanding |   | Warrants                Exercisable |
|--------------------------------|--------|-------------------------------------|--------|-------------------------------------|
| Range                of        |   |                                |   | Weighted                Average     |   | Weighted                Average |   |   |   | Weighted                Average |
| Exercise                Prices |   | Number                of Warrants   |   | Exercise                Price       |   | Remaining                Contractual Life |   | Number                of Warrants |   | Exercise                Price |
| $1.20                - $2.99   |   | 1,178,418                           |   | $2.44                               |   | 2.90                yrs |   | 1,178,418 |   | $2.44 |
| $3.00                - 4.99    |   | 598,976                             |   | $3.37                               |   | 2.20                yrs |   | 598,976 |   | $3.37 |
| $5.00                          |   | 260,000                             |   | $5.00                               |   | 3.78                yrs |   | 260,000 |   | $5.00 |

|                                              |   | For                the nine months ended March 31, |
|---------------------------------------------------|--------|----------------------------------------------------|
|                                              |   | 2007                                               |   | 2006                (restated) |
|                                              |   | Shares                                             |   | Weighted                Average Exercise Price |   | Shares |   | Weighted                Average Exercise Price |
|                                              |   |                                               |   |   |   |   |   |   |
| Outstanding                at beginning of period |   | 6,202,827                                          |   | $                2.77 |   | 897,500 |   | $                2.77 |
| Granted                                           |   | -                                                  |   | $                0.00 |   | 5,915,727 |   | $                2.67 |
| Exercised                                         |   | (4,082,099)                                        |   | $                2.63 |   | (100,000) |   | $                2.00 |
| Cancelled                                         |   | (83,334)                                           |   | $                2.90 |   | - |   | $                0.00 |
| Outstanding                at end of period       |   | 2,037,394                                          |   | $                3.03 |   | 6,813,227 |   | $                2.75 |

**Page          10**

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**Note      9- Interest expense**

**Note      10 - Debt issuances**

**Page          11**

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**Note      11 - Related party transactions**

|                                                                                                                                                                | March                31, 2007 |   | March                31, 2006 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------|--------|-------------------------------|
| Shareholders,                unsecured, 8% interest, due December 1, 2007                                                                                           | $                886,183      |   | $                1,129,918    |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due July 19, 2007      | 272,751                       |   | -                             |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, not                less                than 8%, due September 8, 2008  | 200,000                       |   | -                             |
| 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   | 333,333                       |   | -                             |
| Shareholders,                secured with certain Company assets, Wall Street Prime plus 4%, due                July                27, 2008                        | 2,867,611                     |   | -                             |
| Shareholders,                unsecured, 8% interest, due May 23, 2010, monthly                payments of $19,450                                                   | 579,090                       |   | -                             |
| Shareholders,                unsecured, 0% interest, due January 12, 2008, monthly payments of                $25,000                                               | 250,000                       |   |                          |
| Related                party, 8% interest, due upon demand                                                                                                          | 12,475                        |   | -                             |
| Total                debt                                                                                                                                           | 5,481,177                     |   | 1,129,918                     |

**Page          12**

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**Note      12 - Changes in common shares outstanding**

|                                                       | Common     |
|------------------------------------------------------------|------------|
|                                                       | Shares     |
| Outstanding                common shares at June 30, 2006  | 5,944,586  |
| Debt                converted to stock                     | 1,755,684  |
| Warrants                converted to stock                 | 1,791,501  |
| Options                converted to stock                  | 754,400    |
| Stock                issued for cash                       | 2,679,239  |
| Stock                issued for services                   | 1,086,925  |
| Stock                issued for acquisitions               | 135,999    |
| Outstanding                common shares at March 31, 2007 | 14,148,334 |

**Note      13 - 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 |   | $-                                 |   | -                                |   | $1,080,426                |   | $1,646,761 |   | $1,080,426 |   | $1,646,761 |

*Disclosures      about Fair Value of Financial Instruments*

**Page          13**

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**Note      14 - Loss on sale of securities**

**Note      15 - Unrealized securities losses**

**Note      16- Disputed liabilities and cancellation of debt**

**Note      17 - Commitments and contingencies**

**Page          14**

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**Note      18 - Subsequent events**

**Page          15**

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

*Three      Months Ended March 31, 2007 as Compared to Three Months Ended March 31, 2006      *

***Liquidity      and Capital Resources***

**Page          16**

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**Item      3. Controls and Procedures.**

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

***Changes      in Internal Controls***

**Page          17**

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**PART      II**

**Item      1. Legal Proceedings.**

** **

**Page          18**

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**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.**

**Page          19**

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**Item      6. Exhibits.**

***Exhibit      Index***

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

**Page          20**

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**Signatures**

**Industrial      Enterprises of America, Inc**

**May      21, 2007**

**May      21, 2007**