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

**Washington,      D.C. 20549**

**Form      10-QSB**

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

**December      31, 2005**

**[      ] 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**

**      45,307,917 **

----

**Table      of Contents**

|                                                                                                                                                                                  | **Page** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Recent                Developments........................................................                            | 1        |
| **Part                I**                                                                                                                                                             |     |
| Item                1. Financial Statements..................................................                                     | 3        |
| Item                2. Management’s Discussion and Analysis or Plan of Operations                ...                                                                        | 14       |
| Item                3. Controls and Procedures.............................................                                               | 16       |
|                                                                                                                                                                                  |     |
| **Part                II**                                                                                                                                                            |     |
| Item                1. Legal Proceedings....................................................                          | 17       |
| Item                2. Unregistered Sales of Equity Securities and Use of Proceeds                ...                                                                             | 17       |
| Item                3. Defaults Upon Senior Securities....................................                                            | 18       |
| Item                4. Submission of Matters to a Vote of Security Holders............                                                                                | 18       |
| Item                5. Other Information......................................................                | 18       |
| Item                6. Exhibits.................................................................. | 18       |
|                                                                                                                                                                                  |     |
|                                                                                                                                                                                  |     |

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**Recent      Developments**

***Acquisition      of the Pitt Penn Group***

***Litigation      and Judgments***

* *

***Board      of Directors; Appointment of New Executive Officers***

**Page          1**

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***Sale      of Securities***

** **

**Page          2**

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**PART      I**

**Item      1. Financial Statements.**

***Critical      Accounting Policies***

**Page          3**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

| LIABILITIES                  & SHAREHOLDERS' EQUITY       |                                                                           |
|---------------------------------------------------------------|--------------------------------------------------------------------------------|
|                                                          | Current                  Liabilities                                           |   |
|                                                          |                                                                           | Current                  maturities of long term debt | $                  944,249 |
|                                                          |                                                                           |   | **31-Dec-05** |
|                                                          |                                                                           |   | **(Unaudited)** |
| ASSETS                                                        |                                                                           |
|                                                          | Current                  Assets                                                |   |
|                                                          |                                                                           | Cash | $                  475,556 |
|                                                          |                                                                           | Accounts                  receivable | 3,838,913 |
|                                                          |                                                                           | Due                  from related parties | 10,800 |
|                                                          |                                                                           | Inventory | 3,896,442 |
|                                                          |                                                                           | Note                  receivable | 500,000 |
|                                                          |                                                                           | Prepaid                  expenses | 144,128 |
|                                                          | Total                  Current Assets                                          | $                  8,865,839 |
|                                                          | Investment                  in common stock                                    | 91,383 |
|                                                          | Property,                  plant and equipment net of accumulated depreciation | 346,056 |
|                                                          | Other                  Assets                                                  | 122,531 |
|                                                          | Other                  intangibles net of amortization                         | 83,596 |
|                                                          | Goodwill                                                                       | 4,519,038 |
|                                                          |                                                                           |   |   |
| TOTAL                  ASSETS                                 | $                  14,028,443                                                  |
|                                                          |                                                                           | Accounts                  payable | 3,978,220 |
|                                                          |                                                                           | Payable                  related parties | 359,180 |
|                                                          |                                                                           | Accrued                  payables | 179,848 |
|                                                          |                                                                           | Accrued                  interest | 91,961 |
|                                                          |                                                                           | Accrued                  interest to shareholders and related parties | 343,370 |
|                                                          | Total                  Current Liabilities                                     | $                  5,896,828 |
|                                                          |                                                                           |   |   |
|                                                          | Long                  Term Liabilities                                         |   |
|                                                          |                                                                           | Notes                  payable net of current debt | 2,294,157 |
|                                                          |                                                                           | Convertible                  notes payable | 2,280,000 |
|                                                          |                                                                           | Notes                  payable related parties | 1,983,300 |
|                                                          | Total                  Long Term Liabilities                                   | $                  6,557,457 |
|                                                          |                                                                           |   |   |
|                                                          | Total                  Liabilities                                             | $                  12,454,285 |
|                                                          |                                                                           |   |   |
|                                                          | Shareholders'                  Equity                                          |   |
|                                                          |                                                                           | Preferred                  stock, $0.001 par value, |   |
|                                                          |                                                                           |                        10,000,000 shares authorized; -0- shares issued and |   |
|                                                          |                                                                           |                        outstanding as of December 31, 2005 | $                  - |
|                                                          |                                                                           | Common                  stock, $0.001 par value, |   |
|                                                          |                                                                           |                        150,000,000 shares authorized; 47,213,090 shares issued and |   |
|                                                          |                                                                           |                        outstanding as of December 31, 2005 | $47,213 |
|                                                          |                                                                           | Additional                  paid-in capital | 10,675,226 |
|                                                          |                                                                           | Subscribed                  stock payable | 26,489 |
|                                                          |                                                                           | Shareholder                  receivable | (6,000) |
|                                                          |                                                                           | Director                  fees, unamortized | (33,750) |
|                                                          |                                                                           | Prepaid                  consultant compensation | (817,705) |
|                                                          |                                                                           | Retained                  (deficit) | (8,317,315) |
|                                                          | Total                  Shareholders' Equity                                    | $                  1,574,159 |
| TOTAL                  LIABILITIES & SHAREHOLDERS' EQUITY | $                  14,028,443                                                  |

**Page          4**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

|                                                                  |                                                   | **Three                  Months Ended** |                           | **Six                  Months Ended** |
|-----------------------------------------------------------------------|--------------------------------------------------------|-----------------------------------------|--------------------------------|---------------------------------------|
|                                                                  |                                                   | **31-Dec-05**                           |                           | **31-Dec-04**                         |   | **31-Dec-05** |   | **31-Dec-04** |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Revenues                                                              |                                                   | $                  5,626,379            |                           | $                  1,348,787          |   | $                  10,551,573 |   | $                  1,348,787 |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Cost                  of Goods Sold                                   | 4,236,325                                              |                                    | 1,126,505                      |                                  | 7,745,140 |   | 1,126,505 |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Gross                  Profit                                         |                                                   | $                  1,390,054            |                           | $                  222,282            |   | $                  2,806,433 |   | $                  222,282 |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Expenses:                                                             |                                                   |                                    |                           |                                  |   |   |   |   |
|                                                                  | Selling,                  general & administrative | $                  879,514              |                           | $                  171,986            |   | $                  1,848,254 |   | $                  196,108 |
|                                                                  | Salaries                  and contract labor           | 216,365                                 |                           | 112,774                               |   | 420,287 |   | 117,502 |
|                                                                  | Depreciation                  and amortization         | 94,754                                  |                           | 5,971                                 |   | 123,957 |   | 5,971 |
|                                                                  | Legal                  and professional fees           | 140,963                                 |                           | 942,218                               |   | 269,548 |   | 979,679 |
|                                                                  | Total                  Expenses                        | $                  1,331,596            |                           | $                  1,232,949          |   | $                  2,662,046 |   | $                  1,299,260 |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
|                                                                  | Income                  (loss) from operations         | $                  58,458               |                           | $                  (1,010,667)        |   | $                  144,387 |   | $                  (1,076,978) |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Other                  Income or Expense                              |                                                   |                                    |                           |                                  |   |   |   |
|                                                                  | Interest                  expense related party        | (86,926)                                |                           | (6,725)                               |   | (201,505) |   | (6,725) |
|                                                                  | Interest                  expense other                | (276,061)                               |                           | (104,007)                             |   | (585,253) |   | (154,470) |
|                                                                  | Gain                  on sale of stock                 | 506,691                                 |                           | -                                     |   | 506,691 |   | - |
|                                                                  | Interest                  income                       | 1,200                                   |                           | -                                     |   | 2,440 |   | - |
|                                                                  | Miscellaneous                  income                  | 7,575                                   |                           | 3,000                                 |   | 7,849 |   | 3,000 |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Total                  Other Income or Expense                        | $                  152,479                             |                                    | $                  (107,732)   |                                  | $                  269,778 |   | $                  (158,195) |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Net                  (Loss) from operations                           | $                  210,937                             |                                    | $                  (1,118,399) |                                  | $                  (125,391) |   | $                  (1,235,173) |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Provision                  for income taxes                           | 0                                                      |                                    | 9,339                     |                                  | - |   | 9,339                    |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Net                  income (loss)                                    | $                  210,937                             |                                    | $                  (1,109,060) |                                  | $                  (125,391) |   | $                  (1,225,834) |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Net                  income (loss) per share basic and diluted        | $                  -                                   |                                    | $                  (0.06)      |                                  | $                  - |   | $                  (0.07) |
|                                                                  |                                                   |                                    |                           |                                  |   |   |   |   |
| Weighted                  average number of common shares outstanding | 45,328,307                                             |                                    | 18,577,750                     |                                  | 40,851,868 |   | 18,577,750 |

**Page          5**

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**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

|                                                                                                    |                                                                       |                                            |                           | **Six                Months Ended**  |
|---------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|-------------------------------------------------|--------------------------------|--------------------------------------|
|                                                                                                    |                                                                       |                                            |                           | **December                31, 2005** |   | **December                31, 2004** |
|                                                                                                    |                                                                       |                                            |                           |                                 |   |   |
| **Operating                activities**                                                                 |                                                                       |                                            |                           |
|                                                                                                    | Net                income (loss)                                           | $                (125,391)                      |                           | $                (1,225,835)         |
|                                                                                                    | Non-cash                items                                              |                                            |                           |                                 |
|                                                                                                    |                                                                       | Depreciation                and amortization    | 123,957                        |                                 | 5,971 |
|                                                                                                    |                                                                       | Stock                based compensation         | 155,880                        |                                 | - |
|                                                                                                    |                                                                       | Stock                sales for notes receivable | (451,425)                      |                                 | - |
|                                                                                                    | Net                changes in working capital accounts                     | (238,515)                                       |                           | 331,912                              |
|                                                                                                    | **Net                cash (used) by operating activities**                 | **$                (535,494)**                  |                           | **$                (887,952)**       |
| **Investing                activities**                                                                 |                                                                       |                                            |                           |
|                                                                                                    | Additions                to property, plant and equipment                  | (120,794)                                       |                           | (5,264)                              |
|                                                                                                    | Investment                in common stock                                  | 5,767                                           |                           | -                                    |
|                                                                                                    | Investment                in subsidiaries                                  | (969,519)                                       |                           | (45,001)                             |
|                                                                                                    | Other                                                                      | (20,000)                                        |                           | (1,013)                              |
|                                                                                                    | **Net                cash (used) by investing activities**                 | **$                (1,104,546)**                |                           | **$                (51,278)**        |
| **Financing                activities**                                                                 |                                                                       |                                            |                           |
|                                                                                                    | Payments                towards bank line of credit                        | -                                               |                           | 111,848                              |
|                                                                                                    | Proceeds                from issuance of debt                              | 9,328,277                                       |                           | 488,729                              |
|                                                                                                    | Principal                payments on debt                                  | (7,273,194)                                     |                           | (58,412)                             |
|                                                                                                    | Proceeds                from notes payable related party and shareholders  | 50,000                                          |                           | -                                    |
|                                                                                                    | Payments                on related party loans                             | (334,068)                                       |                           | (138,729)                            |
|                                                                                                    | Proceeds                from issuance of common stock                      | 40,000                                          |                           | 98,475                               |
|                                                                                                    | Equity                development fees                                     | (50,000)                                        |                           | 315,000                              |
|                                                                                                    | **Net                cash provided by Financing Activities**               | **$                1,761,015**                  |                           | **$                816,911**         |
| **Net                cash increase (decrease) for period**                                              | **$                120,975**                                               |                                            | **$                (122,319)** |
| Cash                at beginning of period                                                              | 354,583                                                                    |                                            | 133,219                        |
| **Cash                at end of period**                                                                | **$                475,558**                                               |                                            | **$                10,900**    |
|                                                                                                    |                                                                       |                                            |                           |
| **SUPPLEMENTAL                DISCLOSURES RELATED TO CASH FLOWS:**                                      |                                                                       |                                            |                           |
|                                                                                                    |                                                                       |                                            |                           |                                 |   |   |
|                                                                                                    | Interest                paid                                               | $                407,864                        |                           | $                73,521              |
|                                                                                                    | Income              Taxes                                                  | $                 -                        |                           | $                 -        |
|                                                                                                    |                                                                       |                                            |                           |                                 |   |   |
| **SUPPLEMENTAL                SCHEDULE OF NON-CASH INVESTING AND FINANCING                ACTIVITIES:** |                                                                       |                                            |
|                                                                                                    | Notes                receivable for Power 3 Medical Products stock sales   | $                500,000                        |                           | $                -                   |
|                                                                                                    | Notes                payable for Unifide and Today Way’s acquisition | $                3,750,000                      |                           | $                -                   |
|                                                                                                    | Debt                converted to common stock                              | $                52,500                         |                           | $                50,258              |
|                                                                                                    | Accrued                interest converted to stock                         | $                -                              |                           | $                40,217              |
|                                                                                                    | Stock                issued for Unifide acquisition                        | $                1,050,000                      |                           | $                -                   |
|                                                                                                    | Stock                issued for Today’s Way acquisition              | $                450,000                        |                           | $                -                   |
|                                                                                                    | Stock                issued for services                                   | $                173,750                        |                           | $                7,500               |
|                                                                                                    | Stock                issued for employment agreement                       | $                42,500                         |                           | $                -                   |
|                                                                                                    | Stock                issued for equity development fees                    | $                628,890                        |                           | $                -                   |
|                                                                                                    | Stock                issued for director fees                              | $                45,000                         |                           | $                -                   |
|                                                                                                    | Stock                cancelled                                             | $                5,000                          |                           | $                -                   |

**Page          6**

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**Industrial      Enterprises of America, Inc.**

**Notes      to Interim Financial Statements**

**Note      1 - Basis of presentation**

**Note      2 - Inventory**

| Raw                materials       | $1,237,268 |
|------------------------------------|------------|
| Work-in-process                    | 127,858    |
| Packaging                materials | 1,303,600  |
| Finished                goods      | 1,227,716  |
| Total                inventory     | $3,896,442 |

**Note      3 - Property and equipment**

| Equipment                       | 7                -                10 years |
|---------------------------------|--------------------------------------------|
| Vehicles                        | 3                -                5 years  |
| Office                equipment | 7                years                     |

|                                          |   | December                31, 2005 |   | December                31, 2004 |
|-----------------------------------------------|--------|----------------------------------|--------|----------------------------------|
| Plant                equipment                |   | $                385,361         |   | $                240,718         |
| Office                equipment               |   | 49,072                           |   | 36,249                           |
| Vehicles                                      |   | 30,483                           |   | -                                |
| Leasehold                improvements         |   | 9,051                            |   | 5,501                            |
| Less:                Accumulated depreciation |   | (127,911)                        |   | (72,516)                         |
| Net                fixed assets               |   | $                346,056         |   | $                209,952         |

**Page          7**

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**Note      4 - Goodwill**

|                                                  | EMC                Pkg   |   | Unifide     |   | Today’s                Way |   | Total                      |
|-------------------------------------------------------|--------------------------|--------|-------------|--------|----------------------------------|--------|----------------------------|
| Purchase                price                         | $                808,474 |   | $3,050,000  |   | $                950,000         |   | $                4,808,474 |
| Less                assets acquired                   | (1,730,325)              |   | (4,959,477) |   | (399,257)                        |   | (7,089,059)                |
| Add                liabilities assumed                | 1,339,880                |   | 5,017,960   |   | 441,783                          |   | 6,799,623                  |
|                                                  |                     |   |        |   |                             |   |                       |
| Costs                in excess of net assets acquired | $                418,029 |   | $3,108,483  |   | $                992,526         |   | $                4,519,038 |

**Note      5 - Earnings per share**

**Note      6 - Stock based compensation**

|                                                                         | For                the Six Months EndedDecember                31 |
|------------------------------------------------------------------------------|-------------------------------------------------------------------|
|                                                                         | 2005                                                              |   | 2004 |
| Net                (loss), as reported                                       | $                (125,391)                                        |   | $                (1,225,835) |
| Less                compensation cost determined under the fair value method | -                                                                 |   | - |
| Pro                forma net (loss)                                          | $                (125,391)                                        |   | $                (1,225,835) |

| Basic                and dilutive net (loss) per share: |                    |   |                    |
|---------------------------------------------------------|-------------------------|--------|-------------------------|
| As                reported                              | $                (0.00) |   | $                (0.07) |
| Pro                forma                                | $                (0.00) |   | $                (0.07) |

**Page          8**

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**Note      7 - Interest Expense**

**Note      8 - Debt issuances**

**Note      9 - Related party transactions**

|                                                                             | December                31, 2005 |   | December                31, 2004 |
|----------------------------------------------------------------------------------|----------------------------------|--------|----------------------------------|
| Shareholders,                unsecured, 5% interest per month, due July 15, 2005 | $                350,000         |   | $                -0-             |
| Shareholders,                unsecured, 18% interest , due October 30, 2007      | 400,000                          |   | 100,000                          |
| Shareholders,                unsecured, 18% interest, due November 3, 2007       | 50,000                           |   | 50,000                           |
| Shareholders,                unsecured, 18% interest, due November 16, 2007      | 50,000                           |   | 50,000                           |
| Shareholders,                unsecured, 18% interest, due November 26, 2007      | 50,000                           |   | 50,000                           |
| Shareholders,                unsecured, 8% interest, due December 1, 2007        | 1,387,626                        |   | -0-                              |
| Shareholders,                unsecured, 12% interest, due January 30, 2006       | 170,000                          |   | -0-                              |
|                                                                             |                             |   |                             |
|                                                                             | $                2,457,626       |   | $                250,000         |

**Note      10 - Changes in common shares outstanding**

**Page          9**

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|                                                                | Common      |
|---------------------------------------------------------------------|-------------|
|                                                                | Shares      |
| Outstanding                common shares at June 30, 2005           | 37,139,190  |
| Debt                converted to stock                              | 2,200,000   |
| Stock                issued to Unifide Industries LLC members       | 4,188,000   |
| Stock                issued to Todays Way Manufacturing LLC members | 1,812,000   |
| Stock                issued for services                            | 6,533,900   |
| Stock                issued for cash                                | 300,000     |
| Stock                issued for shareholder receivable              | 40,000      |
| Stock                cancelled                                      | (5,000,000) |
| Outstanding                common shares at September 30, 2005      | 47,213,090  |

**Note      11 - Gain on sale of securities**

**Note      12 - Mergers and acquisitions**

**Note      13 - Disputed Liabilities and Cancellation of Debt**

**Note      14 - Proforma Statement of Operations for the three months ended December 31,      2004 and December 31, 2005**

**Page          10**

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|                                                       | ILNP                                                |   | EMC                                                 |   | UNIFIDE                                             |   | TODAY'S                WAY                          |   |         |   | COMBINED                                            |
|------------------------------------------------------------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|--------------|--------|-----------------------------------------------------|
|                                                       | Three                months ended December 31, 2004 |   | Three                months ended December 31, 2004 |   | Three                months ended December 31, 2004 |   | Three                months ended December 31, 2004 |   | Eliminations |   | Three                months ended December 31, 2004 |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                sales                                   | $                -                                  |   | $1,348,787                                          |   | $3,471,460                                          |   | $497,568                                            |   | (497,568)    |   | $4,820,247                                          |
| Cost                of goods sold                          | -                                                   |   | 1,126,505                                           |   | 3,125,579                                           |   | 268,723                                             |   | (497,568)    |   | 4,023,239                                           |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Gross                profit                                | $                -                                  |   | $222,282                                            |   | $345,881                                            |   | $228,845                                            |   |         |   | $797,008                                            |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Selling                & admin                         | 154,258                                             |   | 73,751                                              |   | 449,272                                             |   | 129,915                                             |   |         |   | 807,196                                             |
| Salaries                & contract labor               | 666,961                                             |   | 84,273                                              |   | 105,851                                             |   | 60,923                                              |   |         |   | 918,008                                             |
| Depreciation                & amortization             | -                                                   |   | 1,293                                               |   | 6,365                                               |   | 42,950                                              |   |         |   | 50,608                                              |
| Legal                & professional                    | 269,085                                             |   | 79,700                                              |   | 5,688                                               |   | 3,853                                               |   |         |   | 358,326                                             |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Total                expenses                              | $1,090,304                                          |   | $236,018                                            |   | $567,176                                            |   | $237,641                                            |   |         |   | $2,131,139                                          |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss) from operations           | $(1,090,304)                                        |   | $(13,736)                                           |   | $(221,295)                                          |   | $(8,796)                                            |   |         |   | $(1,334,131)                                        |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Interest                expense                            | 117,909                                             |   | 43,286                                              |   | 24,975                                              |   | 7,766                                               |   |         |   | 193,936                                             |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss) before income tax expense | $(1,208,213)                                        |   | $(57,022)                                           |   | $(246,270)                                          |   | $(16,562)                                           |   |         |   | $(1,528,067)                                        |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Income                tax expense                          | -                                                   |   | -                                                   |   | -                                                   |   | -                                                   |   |         |   | -                                                   |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss)                           | $(1,208,213)                                        |   | $(57,022)                                           |   | $(246,270)                                          |   | $(16,562)                                           |   |         |   | $(1,528,067)                                        |

**Page          11**

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|                                                       | ILNP                                                |   | EMC                                                 |   | UNIFIDE                                             |   | TODAY'S                WAY                          |   |         |   | COMBINED                                            |
|------------------------------------------------------------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|-----------------------------------------------------|--------|--------------|--------|-----------------------------------------------------|
|                                                       | Three                months ended December 31, 2005 |   | Three                months ended December 31, 2005 |   | Three                months ended December 31, 2005 |   | Three                months ended December 31, 2005 |   | Eliminations |   | Three                months ended December 31, 2005 |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                sales                                   | $                -                                  |   | $1,092,943                                          |   | $4,533,436                                          |   | $15,390                                             |   | $(15,390)    |   | $5,626,379                                          |
| Cost                of goods sold                          | -                                                   |   | 940,975                                             |   | 3,310,740                                           |   | -                                                   |   | (15,390)     |   | 4,236,325                                           |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Gross                profit                                | $                -                                  |   | $151,968                                            |   | $1,222,696                                          |   | $15,390                                             |   |         |   | $1,390,054                                          |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Selling                & admin                         | 51,441                                              |   | 54,780                                              |   | 757,723                                             |   | 439                                                 |   |         |   | 864,383                                             |
| Salaries                & contract labor               | 35,000                                              |   | 63,525                                              |   | 152,840                                             |   | -                                                   |   |         |   | 216,365                                             |
| Depreciation                & amortization             | 66,727                                              |   | 4,772                                               |   | 14,636                                              |   | 8,136                                               |   |         |   | 94,271                                              |
| Legal                & professional                    | 65,000                                              |   | 16,703                                              |   | 10,860                                              |   | -                                                   |   |         |   | 92,563                                              |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Total                expenses                              | $218,168                                            |   | $139,780                                            |   | $936,059                                            |   | $8,575                                              |   |         |   | 1,302,582                                           |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss) from operations           | (218,168)                                           |   | 12,188                                              |   | 286,637                                             |   | $6,815                                              |   |         |   | 87,472                                              |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Interest                expense                            | 147,303                                             |   | 140,216                                             |   | 75,468                                              |   | 1,549                                               |   |         |   | 364,536                                             |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss) before income tax expense | $(365,471)                                          |   | $(152,404)                                          |   | $211,169                                            |   | $5,266                                              |   |         |   | $(301,440)                                          |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Other                Income                                | 406,701                                             |   | 5,553                                               |   | -                                                   |   | 122                                                 |   |         |   | 412,376                                             |
| Income                tax expense                          | -                                                   |   | -                                                   |   | -                                                   |   | -                                                   |   |         |   | -                                                   |
|                                                       |                                                |   |                                                |   |                                                |   |                                                |   |         |   |                                                |
| Net                income (loss)                           | $41,230                                             |   | $(146,851)                                          |   | $211,169                                            |   | $5,388                                              |   |         |   | $110,936                                            |

**Note      15 - Balance sheet variances since June 30, 2005**

**Page          12**

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|                             | ILNP                             |   | EMC                              |   | UNIFIDE                          |   | TODAY'S                WAY       |   |         |   | COMBINED                         |
|----------------------------------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|--------------|--------|----------------------------------|
|                             | December                31, 2004 |   | December                31, 2004 |   | December                31, 2004 |   | December                31, 2004 |   | Eliminations |   | December                31, 2004 |
|                             |                             |   |                             |   |                             |   |                             |   |         |   |                             |
| Total                assets      | $733,352                         |   | $1,927,824                       |   | $4,691,461                       |   | $415,776                         |   |         |   | $7,768,413                       |
|                             |                             |   |                             |   |                             |   |                             |   |         |   |                             |
| Total                Liabilities | $2,651,968                       |   | $1,433,029                       |   | $4,259,169                       |   | $436,951                         |   |         |   | $8,781,117                       |

|                             | ILNP                             |   | EMC                              |   | UNIFIDE                          |   | TODAY'S                WAY       |   |         |   | COMBINED                         |
|----------------------------------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|----------------------------------|--------|--------------|--------|----------------------------------|
|                             | December                31, 2005 |   | December                31, 2005 |   | December                31, 2005 |   | December                31, 2005 |   | Eliminations |   | December                31, 2005 |
|                             |                             |   |                             |   |                             |   |                             |   |         |   |                             |
| Total                assets      | $6,303,577                       |   | $2,699,885                       |   | $6,691,272                       |   | $366,622                         |   | (2,132,911)  |   | $13,928,445                      |
|                             |                             |   |                             |   |                             |   |                             |   |         |   |                             |
| Total                Liabilities | $5,599,778                       |   | $1,209,130                       |   | $5,860,712                       |   | $412,868                         |   | (628,202)    |   | $12,454,286                      |

**Note      16 - Subsequent events**

**Note      17 - Goodwill Impairment**

**Note      18 - Commitments and contingencies**

**Note        19 - Commitments and        contingencies**

**Page          13**

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

*Three      Months Ended December 31, 2005 as Compared to Three Months Ended December 31,      2004 *

**Page          14**

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*Six      Months Ended December 31, 2005 as Compared to Six Months Ended December 31,      2004*

***Liquidity      and Capital Resources***

**Page          15**

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**Item      3. Controls and Procedures.**

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

***Changes        in Internal Controls***

**Page          16**

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**PART      II**

**Item      1. Legal Proceedings.**

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

** **

**Page          17**

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

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

**Item      5. Other Information.**

**Item      6. Exhibits.**

***Exhibit      Index***

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

**Page          18**

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**Signatures**

**Industrial      Enterprises of America, Inc**

**Date:      February 14, 2006**

**James      W. Margulies**

**Date:      February 14, 2006**

**      John D. Mazzuto**