**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**




For the quarterly period
ended
    December 31, 2004





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








Commission
File Number: 000-30646








**Industrial
Enterprises of America, Inc.**


(formerly
known as Advanced Bio/Chem, Inc.)


(Exact
name of registrant as specified in its charter)











Nevada
    **13-3963499**(State or jurisdiction of
    incorporation
    (I.R.S. Employer Identification
  No.)or organization)770
      South Post Oak Lane, Suite 330
    Houston,
      Texas 77056(Address of principal executive
      offices)
    (Zip Code)(Registrant’s telephone number,
      including area code)
    (713)
      622-2875








Advanced
Bio/Chem, Inc., December 31


(Former
name, former address and former fiscal year, if changed since last
report)





Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing


requirements
for the past 90 days. Yes [ ] No [X]





APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY


PROCEEDING
DURING THE PRECEDING FIVE YEARS





Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]





APPLICABLE
ONLY TO CORPORATE ISSUERS





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.





As of
March 30, 2005, 27,624,190 shares of the registrant’s Common Stock were
outstanding.








Transitional
Small Business Disclosure Format (Check one): Yes [ ]  No
[x]






















**Table
of Contents**








**Page**Recent
      Developments................................................................
    1**Part
      I**Item
      1. Financial Statements.........................................................
    2Item
      2. Management’s Discussion and Analysis or Plan of Operations
      ......
    3Item
      3. Controls and Procedures.....................................................
    7**Part
      II**Item
      1. Legal Proceedings.............................................................
    7Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds
      .........
    8Item
      3. Defaults Upon Senior Securities............................................
    8Item
      4. Submission of Matters to a Vote of Security Holders
    ..................
    8Item
      5. Other Information............................................................
    8Item
      6. Exhibits..........................................................................
    8






















***Recent
Developments***





***Change
in Fiscal Year End***





On
December 22, 2004, the Board of Directors of Industrial Enterprises of America,
Inc., a Nevada corporation (the “Company”), approved the change in the Company’s
fiscal year end from December 31 to June 30. The Company, as the parent of EMC
Packaging, Inc., a Delaware corporation (“EMC”), is now a holding company of an
operating subsidiary. The fiscal year end of EMC is June 30; therefore, in order
to more closely align its operations and internal controls **** with that
of its wholly owned subsidiary, the Board of Directors approved the change in
the Company’s fiscal year end. The change is described in further detail in the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange
Commission (the “Commission”) on March 30, 2005.


1






Item 1.  Financial
Statements





***Critical
Accounting Policies***





The
Company believes that the following critical accounting policies reflect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements **:**





The
following significant accounting policies pertain to EMC Packing, Inc.(“EMC”),
the Company’s current sole operating unit at December 31, 2004.





Revenue
Recognition





EMC is
primarily engaged in the manufacturing and sale of packaged refrigerants for the
automotive and dusting markets. Revenue is recognized with the successful
manufacture and delivery of such product to the end user customer.





Inventory





Inventory
is stated at the lower of cost or market, with cost determined on a first-in,
first-out basis.





Machinery
and Equipment





Machinery
and equipment are recorded at cost. Depreciation is computed on the estimated
useful lives of the assets ranging from three to ten years using the
straight-line method.





Income
Tax





The
Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted tax rates and laws that are expected to be in effect when the
differences are expected to be recovered. The Company provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not. Management has determined as of December
31, 2004 that it is not probable that the Company will realize a future tax
benefit from its deferred tax assets.





Accounting
for Stock-Based Compensation





The
Company has adopted the disclosure provisions of SFAS No. 123, “Accounting for
Stock-Based Compensation.” In accordance with the provisions of SFAS No. 123,
the Company applies Accounting Principles Board Opinion 25 and related
interpretations in accounting for stock issued to its employees and consultants.
Management exercises judgment in its determination of when significant non-cash
stock transactions have occurred.





Please
see the Financial Statements beginning on page F-1 **.**





2





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





***Acquisition
of EMC Packaging, Inc.***





As
previously disclosed, on October 7, 2004, the Company’s Board of Directors
approved the purchase of all of the issued and outstanding capital stock of EMC,
which had been in business since 1974. On the effective date of the purchase,
EMC became the Company’s wholly owned subsidiary. In consideration for their
shares of EMC common stock, the EMC stockholders received an aggregate of
2,296,800 shares of the Company’s common stock, valued at $808,474. The Company,
as the new parent company of EMC and through EMC, intends to continue to market
and sell the products that had been offered by EMC prior to the acquisition.





The
calculation of cost in excess of net assets acquired is as follows:








Purchase price of EMC
    
    $     
      808,474Less assets acquired
    
    (1,730,325)Add liabilities assumed
    
    1,339,880Cost in excess of net assets acquired
    
    $    
       418,029





The cost
in excess of net assets acquired has been recorded as goodwill on the Company’s
financials.





The
following is a summary of the operating results of EMC since acquisition that
has been included in the Company’s three and six months ended December 31, 2004
statement of operations in this quarterly report on Form 10-QSB:








**EMC****From
      Oct 7 to****December
      31, 2004**Net
      sales
    
    $
      1,348,787Cost
      of goods sold
    
    1,126,505Gross
      profit
    
    $
      222,282Selling
      and administrative expenses
    
    $
      11,488Salaries
      and contract labor
    
    146,028Depreciation
      and amortization
    
    5,971Legal
      and professional
    
    42,781Total
      expenses
    
    $
      206,268Net
      (loss) from operations
    
    $
      16,014Interest
      expense
    
    $
      43,286Income
      before income taxesand
      discontinued operations
    
    $
      (27,272)Gain
      on discontinued operations
    
    $ -Income(Loss)
      before income taxes
    
    $
      (27,272)Income
      tax (benefit) expense
    
    $
      (9,338)Net
      income
    
    $
      (17,934)








3





**Change
in Fiscal Year End and Reporting Periods**





In
December 2004, the Company changed its fiscal year from one ending on December
31 to one ending on June 30. Application for the change in accounting year is
pending with the Internal Revenue Service. Accordingly, the Company’s transition
period that ended on December 31, 2004, includes the six months ended December
31, 2004 (“Transition 2004”) and incorporates the operating results of EMC for
that period (as opposed to since EMC’s acquisition on October 7, 2004).





The
following are selected financial data for Transition 2004 and the comparable
six-month period of the prior year:








**ILNP**
    
    **EMC**
    
    **Combined****December
      30, 2004**
    
    **December
      30, 2004**
    
    **December
      30, 2004****(Six
      months)**
      **(as
      adjusted)**
    
    **(Six
      months)**
      **(as
      adjusted**
    
    **(Six
      months)**
      **(as
      adjusted)**Net
      sales
    $ -
    
    $
      2,289,728
    
    $
      2,289,728Cost
      of goods sold
    -
    
    1,873,385
    
    1,873,385Gross
      profit
    $ -
    
    $
      416,343
    
    $
      416,343Selling
      and administrative expenses
    $
      119,867
    
    $
      145,613
    
    $
      265,480Salaries
      and contract labor
    33,228
    
    146,028
    
    179,256Depreciation
      and amortization
    -
    
    4,056
    
    4,056Legal
      and professional
    936,898
    
    85,781
    
    1,022,679Total
      expenses
    $
      1,089,993
    
    $
      381,478
    
    $
      1,471,471Net
      (loss) from operations
    $
      (1,089,993)
    
    $
      34,865
    
    $
      (1,055,128)Interest
      expense
    $
      117,909
    
    $
      80,047
    
    $
      197,956Income
      before income taxesand
      discontinued operations
    $
      (1,207,902)
    
    $
      (45,182)
    
    $
      (1,253,084)Gain
      on discontinued operations
    $ -
    
    $ -
    
    $ -Income
      before income taxes
    $
      (1,207,902)
    
    $
      (45,182)
    
    $
      (1,253,084)Income
      tax expense
    $ -
    
    $
      (18,073)
    
    $
      (18,073)Net
      income
    $
      (1,207,902)
    
    $
      (27,109)
    
    $
      (1,235,011)








The
following is the pro-forma operating results for the six months ended December
31, 2003 assuming EMC had been included in the operating results of the Company
during that period.





**ILNP**
    
    **EMC**
    
    **Combined****December
      30, 2003**
    
    **December
      30, 2003**
    
    **December
      30, 2003****(Six
      months)**
      **(as
      adjusted)**
    
    **(Six
      months)**
      **(as
      adjusted)**
    
    **(Six
      months)**
      **(as
      adjusted)**Net
      sales
    $
      86,320
    
    $
      1,684,267
    
    $
      1,770,587Cost
      of goods sold
    -
    
    1,288,120
    
    1,288,120Gross
      profit
    $
      86,320
    
    $
      396,147
    
    $
      482,467Selling
      and administrative expenses
    $
      95,855
    
    $
      165,862
    
    $
      261,717Salaries
      and contract labor
    1,416,885
    
    133,800
    
    1,550,685Depreciation
      and amortization
    46,637
    
    5,516
    
    52,153Legal
      and professional
    111,418
    
    138,000
    
    249,418Total
      expenses
    $
      1,670,795
    
    $
      443,178
    
    $
      2,113,973Net
      (loss) from operations
    $
      (1,584,475)
    
    $
      (47,031)
    
    $
      (1,631,506)Interest
      expense
    $
      122,097
    
    $
      63,458
    
    $
      185,555Income
      before income taxesand
      discontinued operations
    $
      (1,706,572)
    
    $
      (110,489)
    
    $
      (1,817,061)Gain
      on discontinued operations
    $ -
    
    $ -
    
    $ -Income
      before income taxes
    $
      (1,706,572)
    
    $
      (110,489)
    
    $
      (1,817,061)Income
      tax expense
    $ -
    
    $
      (44,195)
    
    $
      (44,195)Net
      income
    $
      (1,706,572)
    
    $
      (66,294)
    
    $
      (1,772,866)








Results
of operations for the interim periods are not indicative of annual
results.


4
 ***Results
of Operations*** **:**





*For
the Three Months ended December 31, 2004 and 2003*





Revenue
and gross profit for the three months ended December 31, 2004 was $1,348,787 and
$222,282, respectively, and reflects the revenue and gross profit derived from
EMC’s operations since acquisition on October 7, 2004. The miscellaneous revenue
and gross profit of $60,921 for the same period in the prior year represented
residual income from the bio tech division sold in May 2004 to Power
3.





Total
operating expenses for the three-month period ended December 31, 2004 was
$1,232,949. Of this amount, $206,268 was due to EMC’s operations and the
balance, or $1,026,681, was due to ILNP corporate. The greater majority of these
corporate expenses pertained to legal and professional fees of $942,218, arising
from the acquisition of EMC and the reorganization of the Company. The operating
expenses in the same three-month period in the prior year were $455,079. Salary
and contract labor accounted for $387,791 of this total. Interest expenses for
the three months ended December 31, 2004 and 2003 was $110,732 and $67,848,
respectively. Interest expense in the three months ended December 31, 2004
pertaining to the EMC operation was $43,781.





The
result of the above was a net loss for the three months ended December 31, 2004
of $(1,109,060), compared to a loss of $(462,005) in the same period in 2003.





*For
the Six Months ended December 31, 2004 and 2003*





Revenue
and gross profit for the six months ended December 31, 2004 was $1,348,787 and
$222,282, respectively, and reflects the revenue and gross profit derived from
EMC’s operations since the acquisition on October 7, 2004. The miscellaneous
revenue and gross profit of $86,320 for the same period in the prior year
represented residual income from the bio tech division sold in May 2004 to Power
3.





Total
operating expenses for the three-month period ended December 31, 2004 was
$1,299,260. Of this amount, $206,268 was due to EMC’s operations and the
balance, or $1,092,992, was due to ILNP corporate. The greater majority of these
corporate expenses pertained to legal and professional fees of $ 979,679,
arising from the acquisition of EMC and the reorganization of the Company. The
operating expenses in the same six-month period in the prior year were
$1,670,795. Salary and contract labor accounted for $1,416,885 of this total.
Included in the six month amounts in 2003 was a current period expense of
$660,000 for the stock grant of 825,000 shares (at $0.80 per share) to the
former CEO of the Company. In addition, an additional 200,000 shares (at $0.80
per share) was promised under an option agreement entered into on September 5,
2003 but not yet executed; nor are they anticipated to be executed since the
officer is no longer employed by the Company.





Interest
expenses for the six months ended December 31, 2004 and 2003 was $161,195 and
$122,097 respectively. Interest expense in the six month ended December 31, 2004
pertaining to the EMC operation was $43,781.


5


The
result of the above was a net loss for the six months ended December 31, 2004 of
$(1,225,835) compared to a loss of $(1,706,572) in the same period in 2003.





Net
(loss) income per share basic and diluted for the three and six months ended
December 31, 2004 was $(0.06) and $(0.07) per share, respectively, compared to
$(0.04) and $(0.15) in the same respective periods in 2003.








***Liquidity
and Capital Resources:***





The
Company had a working capital deficit of $(1,791,248) as at December 31, 2004.
This compares to a working capital deficit of $(1,977,216) as at December 31,
2003.





Net cash
provided by operations for the six months ended December 31, 2004 was a negative
$(887,952), compared to a negative cash flow in the same period in 2003 of
$(443,275). The majority of the increase is attributable to the decrease in
losses for the comparable periods offset by the non cash requirement generated
from stock based compensation in the 2003 period.





The
Company obtained funds to operate in the six months ended December 31, 2004 from
the issuance of common stock subscriptions in the amount of $315,000 and
increased notes payable and bank debt of approximately $600,000.





CAUTIONARY
STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995





It should
be noted that in this Management's Discussion and Analysis or Plan of Operations
contains "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The terms "believe", "anticipate", "intend", "goal",
"expect" and similar expressions may identify forward-looking statements. These
forward-looking statements represent the Company's current expectations or
beliefs concerning future events. The matters covered by these statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those set forth in the forward-looking statements,
including, but not limited to: (i) the Company's history of ongoing operating
losses; (ii) the overall marketplace and clients' usage of EMC’s products,
including demand therefor, the impact of competitive technologies, products and
pricing, particularly given the substantially larger size and scale of certain
competitors and potential competitors, control of expenses, and revenue
generation by the acquisition of new customers; (iii) the consequent results of
operations given the aforementioned factors; and (iv) the requirement for the
Company to raise additional working capital to fund operations and the
availability and terms of any such funding to the Company. Without any such
funding, the Company believes it may be forced to curtail operations, and if no
alternative to financing, such as a merger or acquisition, is consummated, the
Company may not continue as a going concern. Other risks are detailed from time
to time in the Company's 2003 Annual Report on Form 10-K, as amended, and in its
other Securities and Exchange Commission reports and statements. The foregoing
list should not be construed as exhaustive, and the Company disclaims any
obligation to subsequently revise any forward-looking statements to reflect
events or circumstances after the date of such statements, or to reflect the
occurrence of anticipated or unanticipated events. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made.








6





**Item
3. Controls and Procedures.**





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





The
Company's Chief Executive Officer and Chief Financial Officer, after evaluating
the effectiveness of the Company's disclosure controls and procedures (as
defined in Exchange Act Rule 13a-15(e)) as of the end of the period being
reported (the "Evaluation Date"), have concluded that as of the Evaluation Date,
the Company's disclosure controls and procedures were not effective in ensuring
that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms.
Such officers reached this conclusion because the Company’s records, prior to
the recent change in management, had not been maintained and processed to meet
both financial reporting and other Commission disclosure needs and requirements.
Management has reviewed the recommendations set forth in a letter from the
Company’s auditors and have set March 30, 2005 as a deadline to bring the
Company’s disclosure controls and procedures in line with such recommendations.
The Company’s independent auditors have made a number of recommendations
including, but not limited to, the following: (i) the Company should improve
accounting controls through the formalization of accounting practices through
promulgation of accounting policies and procedures, and (ii) additional
recommendations related to improving internal controls through the separation of
duties within the accounting function. Management has hired outside consultants
to help with this process.





***Changes
in Internal Controls***





No
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls following the Evaluation Date came to
management's attention.








**PART
II**





**Item
1. Legal Proceedings.**





As of
March 30, 2005, the Company was neither a party nor was any of its properties
subject to any legal proceedings.








7








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





The
following sets forth information relating to all sales of our common stock
during the quarter ended December 31, 2004, which sales were not registered
under the Securities Act.





During
the quarter ended December 31, 2004, had no sales of shares of its common stock.
Shares of common stock were subscribed to during the quarter but were not
issued.





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





None.





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





None.





**Item
5. Other Information.**





Please
see “Recent Developments” on page 1.





**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.








8





**Signatures**





In
accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





**Industrial
Enterprises of America, Inc** .


(Registrant)





Date:
March 31, 2005


By:
/s/ John D. Mazzuto


John D.
Mazzuto


Chief
Financial Officer,
Vice Chairman of the Board, Assistant Secretary and a
Director











Date:
March 31, 2005


By: /s/ Crawford Shaw


Crawford
Shaw


Chief
Executive Officer,  Chairman
of the Board, President and a Director





Date:
March 31, 2005


By:
/s/ Dennis O’Neill


Dennis
O’Neill


Controller











**INDUSTRIAL
ENTERPRISES OF AMERICA, INC.**


**Balance
Sheet**


**December
31, 2004**


**(Unaudited)**





ASSETSCurrent
      AssetsCash
    
    
    $
      10,900Accounts
      receivable
    929,330Inventory
    
    655,913Prepaid
      expenses
    13,632Total
      Current Assets
    $
      1,609,775Investment
      in common stock
    145,725Property,
      plant and equipment net of accumulated depreciation
    100,043Other
      Assets
    
    100,000Goodwill
    
    
    418,029TOTAL
      ASSETS
    
    
    $
      2,373,572
   F -
1
 See Notes
to Financials


LIABILITIES
      & SHAREHOLDERS' DEFICITCurrent
      LiabilitiesLitigation
      settlement payable
    $
      20,000Current
      maturities of long term debt
    157,916Liabilities
      due to discontinued operations
    211,753Credit
      card debt - related parties
    92,663Bank
      line of credit
    831,761Accounts
      payable
    747,740Other
      accrued payables
    599,704Accrued
      salaries, benefits and severance pay
    153,032Accrued
      interest
    370,154Accrued
      interest to shareholders and related parties
    111,739Related
      party payable
    76,832Lease
      payables
    22,906Contractor
      payable
    4,823Total
      Current Liabilities
    $
      3,401,023Long
      Term LiabilitiesNotes
      payable, net of current maturities
    1,080,572Notes
      payable related parties and shareholders
    388,115Other
      debt
    53,740Deferred
      taxes
    92,099Total
      Long Term Liabilities
    $
      1,614,526Total
      Liabilities
    $
      5,015,549Shareholders'
      DeficitCommon
      stock, $0.001 par value,50,000,000
      shares authorized,18,577,750
      shares issued and outstandingat
      December 31, 2004
    18,578Additional
      paid-in capital
    2,007,687Subscribed
      stock
    1,123,474Treasury
      stock
    (45,002)Retained
      (deficit)
    (5,746,714)Total
      Shareholders' Deficit
    $
      (2,641,977)TOTAL
      LIABILITIES & SHAREHOLDERS' DEFICIT
    $
      2,373,572


F - 2
See Notes
to Financials




**INDUSTRIAL
ENTERPRISES OF AMERICA, INC.**


**Statement
of Operations**


**(Unaudited)**








**Three
      Months Ended**
    
    **Six
      Months Ended****December
      31, 2004**
    
    **December
      31, 2003**
      **(as
      adjusted)**
    
    **December
      31, 2004**
    
    **December
      31, 2003**
      **(as
      adjusted)**Revenues
    $
      1,348,787
    
    $
      60,921
    
    $
      1,348,787
    
    $
      86,320Cost
      of Goods Sold
    1,126,505
    
    -
    
    1,126,505
    
    -Gross
      Profit
    $
      222,282
    
    $
      60,921
    
    $
      222,282
    
    $
      86,320Expenses:Selling,
      general & administrative
    $
      171,986
    
    $
      16,048
    
    $
      196,108
    
    $
      95,855Salaries
      and contract labor
    112,774
    
    387,791
    
    117,502
    
    1,416,885Depreciation
      and amortization
    5,971
    
    23,319
    
    5,971
    
    46,637Legal
      and professional fees
    942,218
    
    27,921
    
    979,679
    
    111,418Total
      Expenses
    $
      1,232,949
    
    $
      455,079.00
    
    $
      1,299,260.00
    
    $
      1,670,795(Loss)
      from operations
    $
      (1,010,667)
    
    $
      (394,157)
    
    $
      (1,076,978.)
    
    $
      (1,584,475)Interest
      expense
    110,732
    
    67,848
    
    161,195
    
    122,097Net
      (Loss) from operations
    $
      (1,121,398)
    
    $
      (462,005.)
    
    $
      (1,238,173.)
    
    $
      (1,706,572)Miscellaneous
      income
    3,000
    
    -
    
    3,000
    
    -Provision
      for income taxes
    9,338
    
    -
    
    9,338
    
    -Net
      income (loss)
    $
      (1,109,060)
    
    $
      (462,005)
    
    $
      (1,225,835)
    
    $
      (1,706,572)Net
      income (loss) per share basic and diluted
    $
      (0.06)
    
    $
      (0.04)
    
    $
      (0.07)
    
    $
      (0.15)Weighted
      average number of common shares outstanding
    18,577,750
    
    11,111,338
    
    18,577,750
    
    11,111,338








F -
3  See Notes
to Financials




**INDUSTRIAL
ENTERPRISES OF AMERICA, INC.**


**Statement
of Cash Flows**


**(Unaudited)**





**Six
      Months Ended****December
      31, 2004**
    
    **December
      31, 2003**
      **(as
      adjusted)****Operating
      activities**Net
      income (loss)
    $
      (1,225,835)
    
    $
      (1,706,888)Non-cash
      itemsDepreciation
      and amortization
    5,971
    
    46,636Stock
      based compensation
    
    
    734,206Net
      changes in working capital accounts
    331,912
    
    482,771**Net
      cash (used) by operating activities**
    **$
      (887,952)**
    
    **$
      (443,275)****Investing
      activities**Additions
      to property, plant and equipment
    (5,264)
    
    -Other
    
    (1,013)
    
    -**Net
      cash (used) by investing activities**
    **$
      (6,277)**
    
    **$
      -****Financing
      activities**Bank
      overdraft
    -
    
    7,498Bank
      line of credit
    111,848
    
    6,642Notes
      payable
    488,729
    
    58,307Notes
      payable related party and shareholders
    (138,729)
    
    (1,856)Other
      debt
    (58,412)
    
    -Common
      stock issued
    98,475
    
    317,000Stock
      subscriptions
    315,000
    
    (12,487)Treasury
      stock
    (45,001)
    
    -**Net
      cash provided by Financing Activities**
    **$
      771,910**
    
    **$
      375,104****Net
      cash increase for period**
    **$
      (122,319)**
    
    **$
      (68,171)**Cash
      at beginning of period
    133,219
    
    68,171**Cash
      at end of period**
    **$
      10,900**
    
    **$
      0**





F -
4  See Notes
to Financials


**Note
1 - Basis of presentation**





Effective
February 11, 2005, the Company changed its name to Industrial Enterprises of
America, Inc. from Advanced Bio/Chem, Inc.





The
Company has suffered recurring losses from operations and its total liabilities
exceed its total assets. This raises substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.





Effective
April, 2003, the Company elected to file as a non-reporting entity in accordance
with Rule 12g-4 of the Securities Exchange Act of 1934. The Company has
currently elected to reinstate as a filing entity and, as such, reference to
year-end financial statements should be referred to the Company’s Form 10-KSB
for the fiscal year ended December 31, 2003.





The
condensed financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading.





These
statements reflect all adjustments, consisting of normal recurring adjustments,
which, in the opinion of management, are necessary for fair presentation of the
information contained therein. It is recommended that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company’s 2003 Form 10-KSB.





During
2004, the Company changed its fiscal year from one ending on December 31 to one
ending on June 30. Application for the change in accounting year is pending with
the Internal Revenue Service. Accordingly, the Company’s transition period that
ended on December 31, 2004, includes the six months ended December 31, 2004
(Transition 2004). The following are selected financial data for Transition 2004
and the comparable six-month period of the prior year:





**ILNP**
    
    **EMC**
    
    **Combined****December
      30, 2004**
    
    **December
      30, 2004**
    
    **December
      30, 2004****(Six
      months)**
    
    **(Six
      months)**
      **(as
      adjusted)**
    
    **(Six
      months)**
      **(as
      adjusted)**Net
      sales
    $ -
    
    $
      2,289,728
    
    $
      2,289,728Cost
      of goods sold
    -
    
    1,873,385
    
    1,873,385Gross
      profit
    $ -
    
    $
      416,343
    
    $
      416,343Selling
      and administrative expenses
    $
      119,867
    
    $
      145,613
    
    $
      265,480Salaries
      and contract labor
    33,228
    
    146,028
    
    179,256Depreciation
      and amortization
    -
    
    4,056
    
    4,056Legal
      and professional
    936,898
    
    85,781
    
    1,022,679Total
      expenses
    $
      1,089,993
    
    $
      381,478
    
    $
      1,471,471Net
      (loss) from operations
    $
      (1,089,993)
    
    $
      34,865
    
    $
      (1,055,128)Interest
      expense
    $
      117,909
    
    $
      80,047
    
    $
      197,956Income
      before income taxesand
      discontinued operations
    $
      (1,207,902)
    
    $
      (45,182)
    
    $
      (1,253,084)Gain
      on discontinued operations
    $ -
    
    $ -
    
    $ -Income
      before income taxes
    $
      (1,207,902)
    
    $
      (45,182)
    
    $
      (1,253,084)Income
      tax expense
    $ -
    
    $
      (18,073)
    
    $
      (18,073)Net
      income
    $
      (1,207,902)
    
    $
      (27,109)
    
    $
      (1,235,011)





F -
5


**ILNP**
    
    **EMC**
    
    **Combined****December
      30, 2003**
    
    **December
      30, 2003**
    
    **December
      30, 2003****(Six
      months)**
    
    **(Six
      months)**
      **(as
      adjusted)**
    
    **(Six
      months)**
      **(as
      adjusted)**Net
      sales
    $
      86,320
    
    $
      1,684,267
    
    $
      1,770,587Cost
      of goods sold
    -
    
    1,288,120
    
    1,288,120Gross
      profit
    $
      86,320
    
    $
      396,147
    
    $
      482,467Selling
      and administrative expenses
    $
      95,855
    
    $
      165,862
    
    $
      261,717Salaries
      and contract labor
    1,416,885
    
    133,800
    
    1,550,685Depreciation
      and amortization
    46,637
    
    5,516
    
    52,153Legal
      and professional
    111,418
    
    138,000
    
    249,418Total
      expenses
    $
      1,670,795
    
    $
      443,178
    
    $
      2,113,973Net
      (loss) from operations
    $
      (1,584,475)
    
    $
      (47,031)
    
    $
      (1,631,506)Interest
      expense
    $
      122,097
    
    $
      63,458
    
    $
      185,555Income
      before income taxesand
      discontinued operations
    $
      (1,706,572)
    
    $
      (110,489)
    
    $
      (1,817,061)Gain
      on discontinued operations
    $ -
    
    $ -
    
    $ -Income
      before income taxes
    $
      (1,706,572)
    
    $
      (110,489)
    
    $
      (1,817,061)Income
      tax expense
    $ -
    
    $
      (44,195)
    
    $
      (44,195)Net
      income
    $
      (1,706,572)
    
    $
      (66,294)
    
    $
      (1,772,866)





Results
of operations for the interim periods are not indicative of annual results.





**Note
2 - Earnings per share**





Basic
earnings per share (EPS) includes dilution and is determined by dividing income
available to common stockholders by the weighted average number of shares of
common stock outstanding. Diluted EPS reflects the potential dilution that could
occur if options and other contracts to issue shares of common stock were
exercised or converted into common stock. There are warrants to issue an
additional 2,600,000 shares as of December 31, 2004, and no warrants or options
as of December 31, 2003. None of the warrants have been exercised as of December
31, 2004.





**Note
3 - Stock based compensation**





As
permitted under generally accepted accounting principles, stock-based awards
granted to employees are accounted for following APB 25. Accordingly, the
Company has not recognized compensation expense for its stock-based awards to
employees. Outlined below are pro forma results had compensation costs for the
Company’s stock-based compensation plans been determined based on the fair value
approach of SFAS 123.


For the
Three Months Ended


December
31


2004
    
    2003
      (as
      adjusted)Net
      income (loss), as reported
    $(1,109,060)
    
    $(464,677)Less
      compensation cost determined under the fair value method
    -
    
    -Pro
      forma net income (loss)
    $(1,109,060)
    
    $(464,677)





Basic
      and dilutive (loss) per share:As
      reported
    $
      (0.06)
    
    $
      (0.04)Pro
      forma
    $
      (0.06)
    
    $
      (0.04)





F -
6


**For
the Six Months Ended**


**December
31**


2004
    
    2003
      (as
      adjusted)Net
      income (loss), as reported
    $(1,225,835)
    
    $(1,706,571)Less
      compensation cost determined under the fair value method
    -
    
    -Pro
      forma net (loss)
    $(1,225,835)
    
    $(1,706,571)





Basic
      and dilutive (loss) per share:As
      reported
    $
      (0.07)
    
    $
      (0.15)Pro
      forma
    $
      (0.07)
    
    $
      (0.15)





These pro
forma amounts may not be representative of future disclosures since the
estimated fair value of stock options is amortized to expense over the vesting
period and options may be granted in future years.





Steven
Rash, former CEO, was granted 825,000 shares of common stock at $0.80 per share
for a charge of $660,000 against operations for the quarter ended September 30,
2003. In addition, pursuant to Mr. Rash’s September 5, 2003, employment
contract, an option agreement for an additional 200,000 shares at the exercise
price of $0.80 was promised, but as yet not executed. No charge to current
operations has been made for the unexecuted option. These options are not
anticipated to be executed.





Disclosures
required by Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"), including pro forma operating
results had the Company prepared its financial statements in accordance with the
fair value based method of accounting for stock- based compensation prescribed
therein are shown below. Exercise prices and weighted-average contractual lives
of stock options outstanding as of December 31, 2004 are as follows:





Options
      Outstanding
    
    Options
      ExercisableWeighted
      Average
    
    Weighted
      Average
    
    
    
    Weighted
      AverageExercise
      Prices
    
    Number
      Outstanding
    
    Remaining
      Contractual Life
    
    Exercise
      Prices
    
    Number
      Exercisable
    
    Exercise
      Price$0.50
    
    2,600,000
    
    4.25
    
    $0.50
    
    2,600,000
    
    $0.50





**Summary
of Options Granted and Outstanding:**





For
      the six months ended December 312004
    
    2003
      (as
      adjusted)Shares
    
    Weighted
      Average Exercise Price
    
    Shares
    
    Weighted
      Average Exercise PriceOptions:Outstanding
      at beginning of period
    
    -
    
    $
      -
    
    -
    
    $
      -Granted
    
    2,600,000
    
    $
      0.50
    
    -
    
    $
      -Cancelled
    
    -
    
    $
      -
    
    -
    
    $
      -Outstanding
      at end of period
    
    2,600,000
    
    $
      0.50
    
    -
    
    $
      -


F -
7


The
following table summarizes the pro forma operating results of the Company for
December 31, 2004, had compensation costs for the stock options granted to
employees been determined in accordance with the fair value based method of
accounting for stock based compensation as prescribed by SFAS No. 123.





Proforma
net income (loss) available to common stockholders  $
(1,225,835)





Proforma
basic and diluted loss per share    $
(0.07)





**Note
4 - Line of credit with bank**





The
Company has a $150,000 renewable line of credit with a commercial bank. The line
bears interest at the bank’s prime rate plus 1%. There was an outstanding
balance as of December 31, 2004, of $150,957. The line is guaranteed by the
personal guarantees of certain shareholders and contains certain financial
covenants.





The
Company recorded interest expense totaling $161,195 and $122,097 for the six
months ended December 31, 2004 and 2003, respectively.





**Note
5 - Changes in outstanding shares of common stock**





Included
in the table below are the changes in shares of common stock since December 31,
2003. See Note 7 for discussion of mergers and acquisitions affecting shares of
common stock.





CommonStockOutstanding
      shares of common stock at December 31, 2003
    11,111,338Stock
      granted to employees
    500,000Debt
      converted to stock
    152,746Stock
      issued for cash
    1,813,666Stock
      issued for services
    5,000,000Outstanding
      shares of common stock at December 31, 2004
    18,577,750





**Note
6 - Discontinued operations**





On May
11, 2004, by unanimous consent of the Board of Directors and a majority of the
stockholders of the Company, the Company entered into an Asset Purchase
Agreement with Power 3 Medical Products, Inc., a New York corporation (“Power
3”). Effective May 18, 2004, the purchase agreement was finalized and the assets
and certain liabilities were acquired by Power 3 for 15,000,000 shares of common
stock of Power 3. (See Note 7 - Mergers and acquisitions for further
details.)





The
assets and liabilities of the Company as of May 17, 2004 consisted of the
following:





Cash
    $
      3,796Accounts
      receivable - trade
    5,785Equipment,
      net of accumulated depreciation
    128,881Patents,
      net of accumulated amortization
    16,844Leasehold
      security deposit
    2,968Total
      Assets
    $
      158,274Capital
      leases
    147,639Accounts
      payable
    80,437Accrued
      expenses
    31,675Total
      Liabilities Disposed of
    $
      259,751Liabilities
      due to discontinued operations
    $(101,477)


F -
8





The
operating results of this discontinued operation for the period ended May 17,
2004, consisted of the following:





Revenues
    $
      141,362Operating
      expenses
    (355,974)Interest
      expense
    (
      58,221)Net
      (loss)
    $(272,884)





**Note
7 - Mergers and acquisitions**





On May 5,
2003, the Company and GESJ, Inc. (“GESJ”), a Texas corporation, owned by four
officers of the Company, entered into an agreement and plan of merger in which
GESJ merged into the Company in a tax-free exchange of shares. 1,903,000 shares
of common stock of the Company were exchanged for all the issued and outstanding
shares of GESJ. The Company continued as the surviving entity. The purpose of
the merger was to acquire the management team of GESJ. GESJ had no assets or
liabilities as of the merger date. The Company has not recorded the transaction
as stock issued for compensation to the officers involved due to the
cancellation of the shares.





As
previously disclosed, on June 12, 2003, the Company’s directors approved a
merger with Ciro International, Inc. (“Ciro”), a Nevada Corporation, whereby the
Company would be the surviving entity in a reverse acquisition with Ciro, a
public shell company. For accounting purposes, the combination was treated as an
issuance of shares for cash by the Company and has not been considered a
business combination.





On May
18, 2004, all fixed assets and intellectual property were acquired by Power 3
for 15,000,000 restricted shares of Power 3 common stock, plus employment of
certain of the Company’s employees, and assumption of certain liabilities of the
Company. The transaction is recognized as a related party transaction and was
recorded as an exchange of assets at the book value of the fixed and
intellectual properties for the restricted shares.





On
October 7, 2004, the Company’s Board of Directors approved a merger with EMC
Packaging, Inc., a Delaware corporation (“EMC”). In consideration for the shares
of EMC common stock, the EMC stockholders received an aggregate of 2,296,800
shares of the Company’s common stock, valued at $808,474. For accounting
purposes, the merger has been considered a business combination.


F - 9