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

**Washington,      D.C. 20549**

**Form      10-QSB**

**Amendment        No. 1**

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

**September      30, 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**

----

**Table      of Contents**

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

----

**Explanatory        Note**

----

**Recent      Developments**

***Potential      Acquisition***

***Power3      Dispute***

***Sale      of Securities***

** **

----

***Board      of Directors***

** **

***Change      in Authorized Shares***

** **
** **

***Refinancing***

----

**Item      1. Financial Statements.**

***Critical      Accounting Policies***

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

*Three      Months Ended September 30, 2005 as Compared to Three Months Ended September      30,      2004 *

----

***Liquidity      and Capital Resources***

----

**Item      3. Controls and Procedures.**

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

***Changes      in Internal Controls***

**PART      II**

**Item      1. Legal Proceedings.**

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

----

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

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

**Item      5. Other Information.**

**Item      6. Exhibits.**

***Exhibit      Index***

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

----

**Signatures**

**Industrial      Enterprises of America, Inc**

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Balance      Sheet**

**September      30, 2005**

**(Unaudited)**

|                        |                                                                         |                               |      |      |                     | **September                30, 2005** |
|-----------------------------|------------------------------------------------------------------------------|------------------------------------|-----------|-----------|--------------------------|---------------------------------------|
|                        |                                                                         |                               |      |      |                     | **(Unaudited)**                       |
| ASSETS                      |                                                                         |                               |      |      |
|                        | Current                Assets                                                |                               |      |
|                        |                                                                         | Cash                               |      |      | $                795,556 |
|                        |                                                                         | Accounts                receivable | 2,974.632 |
|                        |                                                                         | Inventory                          |      | 3,799,180 |
|                        |                                                                         | Prepaid                expenses    | 43,049    |
|                        | Total                Current Assets                                          | $                7,612,417         |
|                        | Investment                in common stock                                    | 145,725                            |
|                        | Property,                plant and equipment net of accumulated depreciation | 264,991                            |
|                        | Other                Assets                                                  | 102,531                            |
|                        | Other                intangibles net of amortization                         | 88,329                             |
|                        | Goodwill                                                                     | 4,519,038                          |
| TOTAL                ASSETS | $                12,733,032                                                  |

| LIABILITIES                    & SHAREHOLDERS' DEFICIT      |
|-----------------------------------------------------------------|
|                                                            | Current                    Liabilities |   |
|                                                            |   | Current                    maturities of long term debt | $                    928,429 |
|                                                            |   | Lender                    line of credit | 2,082,445 |
|                                                            |   | Accounts                    payable | 3,224,360 |
|                                                            |   | Payable                    related parties | 697,462 |
|                                                            |   | Accrued                    payables | 170,192 |
|                                                            |   | Accrued                    interest | 31,674 |
|                                                            |   | Accrued                    interest to shareholders and related parties | 119,696 |
|                                                            | Total                    Current Liabilities | $                    7,254,258 |
|                                                            | Long                    Term Liabilities |   |
|                                                            |   | Notes                    payable net of current debt | 319,201 |
|                                                            |   | Convertible                    notes payable | 1,780,000 |
|                                                            |   | Notes                    payable related parties | 1,968,660 |
|                                                            | Total                    Long Term Liabilities | $                    4,067,861 |
|                                                            | Total                    Liabilities |   | $                    11,322,119 |
|                                                            | Shareholders'                    Equity |   |
|                                                            |   | Common                    stock, $0.001 par value, |   |
|                                                            |   |   | 150,000,000                    shares authorized; 49,773,090 shares issued and |   |
|                                                            |   |   | outstanding                    as of September 30, 2005 | $                    49,773 |
|                                                            |   | Additional                    paid-in capital | 10,413,666 |
|                                                            |   | Subscribed                    stock | 46,489 |
|                                                            |   | Director                    fees, unamortized | (15,000) |
|                                                            |   | Equity                    development fees, unamortized | (666,243) |
|                                                            |   | Retained                    (deficit) | (8,387,771) |
|                                                            | Total                    Shareholders' Equity | $                    1,410,913 |
| TOTAL                    LIABILITIES & SHAREHOLDERS' EQUITY | $                    12,733,032 |

| LIABILITIES                & SHAREHOLDERS' DEFICIT      |
|-------------------------------------------------------------|
|                                                        | Current                Liabilities |   |
|                                                        |   | Current                maturities of long term debt | $                928,551 |
|                                                        |   | Lender                line of credit | 2,082,445 |
|                                                        |   | Accounts                payable | 3,224,359 |
|                                                        |   | Payable                related parties | 697,462 |
|                                                        |   | Accrued                payables | 170,192 |
|                                                        |   | Accrued                interest | 31,585 |
|                                                        |   | Accrued                interest to shareholders and related parties | 311,060 |
|                                                        | Total                Current Liabilities | $                7,445,654 |
|                                                        | Long                Term Liabilities |   |
|                                                        |   | Notes                payable net of current debt | 319,201 |
|                                                        |   | Convertible                notes payable | 1,780,000 |
|                                                        |   | Notes                payable related parties | 1,883,198 |
|                                                        | Total                Long Term Liabilities | $                3,982,399 |
|                                                        | Total                Liabilities |   | $                11,428,053 |
|                                                        | Shareholders'                Equity |   |
|                                                        |   | Common                stock, $0.001 par value, |   |
|                                                        |   |   | 150,000,000                shares authorized; 49,773,090 shares issued and |   |
|                                                        |   |   | outstanding                as of September 30, 2005 | $                49,773 |
|                                                        |   | Additional                paid-in capital | 10,463,666 |
|                                                        |   | Subscribed                stock | 46,489 |
|                                                        |   | Director                fees, unamortized | (45,000) |
|                                                        |   | Equity                development fees, unamortized | (666,243) |
|                                                        |   | Retained                (deficit) | (8,543,706) |
|                                                        | Total                Shareholders' Equity | $                1,304,979 |
| TOTAL                LIABILITIES & SHAREHOLDERS' EQUITY | $                12,733,032 |

**Please          See the Notes to these Financial Statements**

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Statement      of Operations**

**(Unaudited)**

|                                                                    |                                                     |                           | **Three                    Months Ended** |
|-------------------------------------------------------------------------|----------------------------------------------------------|--------------------------------|-------------------------------------------|
|                                                                    |                                                     |                           | **September                    30, 2005** |   | **September                    30, 2004** |
|                                                                    |                                                     |                           |                                      |   |   |
| Revenues                                                                | $                    4,909,803                           |                           | $                    -                    |
|                                                                    |                                                     |                           |                                      |   |   |
| Cost                    of Goods Sold                                   | 3,493,425                                                |                           | -                                         |
|                                                                    |                                                     |                           |                                      |   |   |
| Gross                    Profit                                         | $                    1,416,378                           |                           | $                    -                    |
|                                                                    |                                                     |                           |                                      |   |   |
| Expenses:                                                               |                                                     |                           |                                      |
|                                                                    | Selling,                    general & administrative | $                    1,116,006 |                                      | $                    54,401 |
|                                                                    | Salaries                    and contract labor           | 203,922                        |                                      | 11,728 |
|                                                                    | Depreciation                    and amortization         | 29,202                         |                                      | - |
|                                                                    | Legal                    and professional fees           | 187,506                        |                                      | 500 |
|                                                                    | Total                    Expenses                        | $                    1,332,714 |                                      | $                    66,628 |
|                                                                    | Income                    (loss) from operations         | $                    83,664    |                                      | $                    (66,628) |
|                                                                    |                                                     |                           |                                      |   |   |
| Interest                    expense                                     | $                    256,390                             |                           | 50,463                                    |
| Net                    income (loss) from operations                    | $                    (172,726)                           |                           | $                    (117,091)            |
|                                                                    |                                                     |                           |                                      |   |   |
| Miscellaneous                    income                                 | 2,231                                                    |                           | -                                         |
|                                                                    |                                                     |                           |                                      |   |   |
| Net                    income (loss)                                    | $                    (170,495)                           |                           | $                    (117,091)            |
|                                                                    |                                                     |                           |                                      |   |   |
|                                                                    |                                                     |                           |                                      |   |   |
| Net                    income (loss) per share basic and diluted        | $                    0.00                                |                           | $                    (0.01)               |
|                                                                    |                                                     |                           |                                      |   |   |
| Weighted                    average number of common shares outstanding | 40,820,212                                               |                           | 15,186,421                                |

|                                                                |                                                 |                       | **Three                Months Ended** |
|---------------------------------------------------------------------|------------------------------------------------------|----------------------------|---------------------------------------|
|                                                                |                                                 |                       | **September                30, 2005** |   | **September                30, 2004** |
|                                                                |                                                 |                       |                                  |   |   |
| Revenues                                                            | $                4,909,803                           |                       | $                -                    |
|                                                                |                                                 |                       |                                  |   |   |
| Cost                of Goods Sold                                   | 3,493,425                                            |                       | -                                     |
|                                                                |                                                 |                       |                                  |   |   |
| Gross                Profit                                         | $                1,416,378                           |                       | $                -                    |
|                                                                |                                                 |                       |                                  |   |   |
| Expenses:                                                           |                                                 |                       |                                  |
|                                                                | Selling,                general & administrative | $                912,084   |                                  | $                54,401 |
|                                                                | Salaries                and contract labor           | 203,922                    |                                  | 11,728 |
|                                                                | Depreciation                and amortization         | 29,202                     |                                  | - |
|                                                                | Legal                and professional fees           | 187,506                    |                                  | 500 |
|                                                                | Total                Expenses                        | $                1,332,714 |                                  | $                66,628 |
|                                                                | Income                (loss) from operations         | $                83,664    |                                  | $                (66,628) |
|                                                                |                                                 |                       |                                  |   |   |
| Interest                expense                                     | $                422,325                             |                       | 50,463                                |
| Net                income (loss) from operations                    | $                (338,661)                           |                       | $                (117,091)            |
|                                                                |                                                 |                       |                                  |   |   |
| Miscellaneous                income                                 | 2,231                                                |                       | -                                     |
|                                                                |                                                 |                       |                                  |   |   |
| Net                income (loss)                                    | $                (336,430)                           |                       | $                (117,091)            |
|                                                                |                                                 |                       |                                  |   |   |
|                                                                |                                                 |                       |                                  |   |   |
| Net                income (loss) per share basic and diluted        | $                0.01                                |                       | $                (0.01)               |
|                                                                |                                                 |                       |                                  |   |   |
| Weighted                average number of common shares outstanding | 40,820,212                                           |                       | 15,186,421                            |

**Please          See the Notes to these Financial Statements**

----

**INDUSTRIAL      ENTERPRISES OF AMERICA, INC.**

**Statement      of Cash Flows**

**(Unaudited)**

|                                                                                     |                                                                          |                                             |                            | **Three                    Months Ended** |
|------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|--------------------------------------------------|---------------------------------|-------------------------------------------|
|                                                                                     |                                                                          |                                             |                            | **September                    30, 2005** |   | **September                    30, 2004** |
|                                                                                     |                                                                          |                                             |                            |                                      |   |   |
| **Operating                    activities**                                              |                                                                          |                                             |                            |
|                                                                                     | Net                    income (loss)                                          | $                    (170,495)                   |                            | $                    (117,091)            |
|                                                                                     | Non-cash                    items                                             |                                             |                            |                                      |
|                                                                                     |                                                                          | Depreciation                    and amortization | 29,202                          |                                      | - |
|                                                                                     |                                                                          | Stock                    based compensation      | 48,750                          |                                      | - |
|                                                                                     | Net                    changes in working capital accounts                    | (182,059)                                        |                            | (110,314)                                 |
|                                                                                     | **Net                    cash (used) by operating activities**                | **$                    (274,602)**               |                            | **$                    (227,405)**        |
| **Investing                    activities**                                              |                                                                          |                                             |                            |
|                                                                                     | Additions                    to property, plant and equipment                 | (25,816)                                         |                            | -                                         |
|                                                                                     | Investment                    in subsidiaries                                 | (2,148,813)                                      |                            | -                                         |
|                                                                                     | **Net                    cash (used) by investing activities**                | **$                    (2,174,629)**             |                            | **$                    -**                |
| **Financing                    activities**                                              |                                                                          |                                             |                            |
|                                                                                     | Payments                    towards bank line of credit                       | -                                                |                            | (364)                                     |
|                                                                                     | Proceeds                    from issuance of debt                             | 4,060,599                                        |                            | -                                         |
|                                                                                     | Principal                    payments on debt                                 | (2,694,804)                                      |                            | -                                         |
|                                                                                     | Proceeds                    from notes payable related party and shareholders | 1,500,000                                        |                            | 100,000                                   |
|                                                                                     | Payments                    on related party loans                            | (15,576)                                         |                            | -                                         |
|                                                                                     | Proceeds                    from issuance of common stock                     | 20,000                                           |                            | 80,000                                    |
|                                                                                     | Stock                    subscriptions                                        | 20,000                                           |                            | 50,000                                    |
|                                                                                     | **Net                    cash provided by Financing Activities**              | **$                    2,890,219**               |                            | **$                    229,636**          |
| **Net                    cash increase for period**                                      | **$                    440,988**                                              |                                             | **$                    2,231**  |
| Cash                    at beginning of period                                           | 354,568                                                                       |                                             | 34,459                          |
| **Cash                    at end of period**                                             | **$                    795,556**                                              |                                             | **$                    36,690** |
|                                                                                     |                                                                          |                                             |                            |                                      |   |   |
| SUPPLEMENTAL                    DISCLOSURES RELATED TO CASH FLOWS:                       |                                                                          |                                             |                            |
|                                                                                     |                                                                          |                                             |                            |                                      |   |   |
|                                                                                     | Interest                    paid                                              | $                    160,688                     |                            | $48,669                                   |
|                                                                                     |                                                                          |                                             |                            |                                      |   |   |
| SUPPLEMENTAL                    SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |                                                                          |                                             |
|                                                                                     |                                                                          |                                             |                            |                                      |   |   |
|                                                                                     | 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                                  | $                    802,140                     |                            | $                    7,500                |

|                                                                                 |                                                                      |                                         |                        | **Three                Months Ended** |
|--------------------------------------------------------------------------------------|---------------------------------------------------------------------------|----------------------------------------------|-----------------------------|---------------------------------------|
|                                                                                 |                                                                      |                                         |                        | **September                30, 2005** |   | **September                30, 2004** |
|                                                                                 |                                                                      |                                         |                        |                                  |   |   |
| **Operating                activities**                                              |                                                                      |                                         |                        |
|                                                                                 | Net                income (loss)                                          | $                (336,430)                   |                        | $                (117,091)            |
|                                                                                 | Non-cash                items                                             |                                         |                        |                                  |
|                                                                                 |                                                                      | Depreciation                and amortization | 29,202                      |                                  | - |
|                                                                                 |                                                                      | Stock                based compensation      | 48,750                      |                                  | - |
|                                                                                 | Net                changes in working capital accounts                    | 56,838                                       |                        | (110,314)                             |
|                                                                                 | **Net                cash (used) by operating activities**                | **$                (201,640)**               |                        | **$                (227,405)**        |
| **Investing                activities**                                              |                                                                      |                                         |                        |
|                                                                                 | Additions                to property, plant and equipment                 | (25,816)                                     |                        | -                                     |
|                                                                                 | Investment                in subsidiaries                                 | (2,148,813)                                  |                        | -                                     |
|                                                                                 | **Net                cash (used) by investing activities**                | **$                (2,174,629)**             |                        | **$                -**                |
| **Financing                activities**                                              |                                                                      |                                         |                        |
|                                                                                 | Payments                towards bank line of credit                       | -                                            |                        | (364)                                 |
|                                                                                 | Proceeds                from issuance of debt                             | 3,973,099                                    |                        | -                                     |
|                                                                                 | Principal                payments on debt                                 | (2,730,266)                                  |                        | -                                     |
|                                                                                 | Proceeds                from notes payable related party and shareholders | 1,550,000                                    |                        | 100,000                               |
|                                                                                 | Payments                on related party loans                            | (15,576)                                     |                        | -                                     |
|                                                                                 | Proceeds                from issuance of common stock                     | 20,000                                       |                        | 80,000                                |
|                                                                                 | Stock                subscriptions                                        | 20,000                                       |                        | 50,000                                |
|                                                                                 | **Net                cash provided by Financing Activities**              | **$                2,817,257**               |                        | **$                229,636**          |
| **Net                cash increase for period**                                      | **$                440,988**                                              |                                         | **$                2,231**  |
| Cash                at beginning of period                                           | 354,568                                                                   |                                         | 34,459                      |
| **Cash                at end of period**                                             | **$                795,556**                                              |                                         | **$                36,690** |
|                                                                                 |                                                                      |                                         |                        |                                  |   |   |
| SUPPLEMENTAL                DISCLOSURES RELATED TO CASH FLOWS:                       |                                                                      |                                         |                        |
|                                                                                 |                                                                      |                                         |                        |                                  |   |   |
|                                                                                 | Interest                paid                                              | $                125,225                     |                        | $48,669                               |
|                                                                                 |                                                                      |                                         |                        |                                  |   |   |
| SUPPLEMENTAL                SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |                                                                      |                                         |
|                                                                                 |                                                                      |                                         |                        |                                  |   |   |
|                                                                                 | 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                                  | $                802,140                     |                        | $                7,500                |

**Please            See the Notes to these Financial Statements**

----

**Industrial      Enterprises of America, Inc.**

**Notes      to Interim Financial Statements**

**Note      1 - Basis of presentation**

**Note      2 - Inventory**

| Raw                materials       | $1,210,511 |
|------------------------------------|------------|
| Work-in-process                    | 54,807     |
| Packaging                materials | 1,121,465  |
| Finished                goods      | 1,908,144  |
|                               |       |
| Total                inventory     | $4,294,927 |

**Note      3 - Property and equipment**

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

----

|                                          |   | September                30, 2005 |   | September                30, 2004 |
|-----------------------------------------------|--------|-----------------------------------|--------|-----------------------------------|
| Plant                equipment                |   | $                374,677          |   | $                -                |
| Office                equipment               |   | 40,104                            |   | 4,070                             |
| Vehicles                                      |   | 30,483                            |   | -                                 |
| Leasehold                improvements         |   | 6,701                             |   | -                                 |
| Less:                Accumulated depreciation |   | (186,974)                         |   | (407)                             |
| Net                fixed assets               |   | $                264,991          |   | $                3,663            |

**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**

----

|                                                                             | 2005       |   | 2004       |
|----------------------------------------------------------------------------------|------------|--------|------------|
| Net                    (loss), as reported                                       | $(170,495) |   | $(117,091) |
| Less                    compensation cost determined under the fair value method | -          |   | -          |
| Pro                    forma net (loss)                                          | $(170,495) |   | $(117,091) |

| Basic                    and dilutive net (loss) per share: |                        |   |                        |
|-------------------------------------------------------------|-----------------------------|--------|-----------------------------|
| As                    reported                              | $                    (0.00) |   | $                    (0.01) |
| Pro                    forma                                | $                    (0.00) |   | $                    (0.01) |

|                                                                         | 2005        |   | 2004       |
|------------------------------------------------------------------------------|-------------|--------|------------|
| Net                (loss), as reported                                       | $(336,430)  |   | $(117,091) |
| Less                compensation cost determined under the fair value method | -           |   | -          |
| Pro                forma net (loss)                                          | $(3363,430) |   | $(117,091) |

| Basic                and dilutive net (loss) per share: |                    |   |                    |
|---------------------------------------------------------|-------------------------|--------|-------------------------|
| As                reported                              | $                (0.01) |   | $                (0.01) |
| Pro                forma                                | $                (0.01) |   | $                (0.01) |

**Note      7 - Interest Expense**

**Note      8 - Related party transactions**

----

|                                                                                 | September                    30, 2005 |   | September                    30, 2004 |
|--------------------------------------------------------------------------------------|---------------------------------------|--------|---------------------------------------|
| Shareholders,                    unsecured, 18% interest, due October 26, 2005       | $                    50,000           |   | $                    50,000           |
| Shareholders,                    unsecured, 5% interest per month, due July 11, 2005 | 200,000                               |   | -0-                                   |
| Shareholders,                    unsecured, 5% interest per month, due July 15, 2005 | 185,463                               |   | -0-                                   |
| Shareholders,                    unsecured, 18% interest , due October 30, 2007      | 400,000                               |   | -0-                                   |
| Shareholders,                    unsecured, 18% interest, due November 3, 2007       | 50,000                                |   | -0-                                   |
| Shareholders,                    unsecured, 18% interest, due November 18, 2007      | 50,000                                |   | -0-                                   |
| Shareholders,                    unsecured, 18% interest, due November 26, 2007      | 50,000                                |   | -0-                                   |
| Shareholders,                    unsecured, 8% interest, due December 1, 2007        | 1,500,000                             |   | -0-                                   |
|                                                                                 |                                  |   |                                  |
|                                                                                 | $                    2,485,463        |   | $                    50,000           |

|                                                                             | September                30, 2005 |   | September                30, 2004 |
|----------------------------------------------------------------------------------|-----------------------------------|--------|-----------------------------------|
| Shareholders,                unsecured, 5% interest per month, due July 15, 2005 | 350,000                           |   | -0-                               |
| Shareholders,                unsecured, 18% interest , due October 30, 2007      | 400,000                           |   | -0-                               |
| Shareholders,                unsecured, 18% interest, due November 3, 2007       | 50,000                            |   | -0-                               |
| Shareholders,                unsecured, 18% interest, due November 16, 2007      | 50,000                            |   | -0-                               |
| Shareholders,                unsecured, 18% interest, due November 26, 2007      | 50,000                            |   | -0-                               |
| Shareholders,                unsecured, 8% interest, due December 1, 2007        | 1,500,000                         |   | -0-                               |
|                                                                             |                              |   |                              |
|                                                                             | $                2,400,000        |   | $                -0-              |

**Note      9 - Changes in common shares outstanding**

|                                                                    | Common     |
|-------------------------------------------------------------------------|------------|
|                                                                    | Shares     |
| Outstanding                    common shares at June 30, 2005           | 29,082,287 |
| Debt                    converted to stock                              | 1,200,000  |
| 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                            | 5,333,900  |
| Stock                    issued for cash                                | 100,000    |
| Outstanding                    common shares at September 30, 2005      | 41,716,187 |

|                                                                | Common     |
|---------------------------------------------------------------------|------------|
|                                                                | Shares     |
| Outstanding                common shares at June 30, 2005           | 37,139,190 |
| Debt                converted to stock                              | 1,200,000  |
| 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                            | 5,333,900  |
| Stock                issued for cash                                | 100,000    |
| Outstanding                common shares at September 30, 2005      | 49,773,090 |

**Note      10 - Mergers and acquisitions**

----

**Note      11 - Disputed Liabilities and Cancellation of Debt**

**Note      12 - Proforma Statement of Operations for the three months ended September      30,      2004 and September 30, 2005**

|                                                       | **ILNP**                                                 |   | **EMC**                                                  |   | **UNIFIDE**                                              |   | **TODAY'S                WAY**                           |   |             |   | **COMBINED**                                             |
|------------------------------------------------------------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|------------------|--------|----------------------------------------------------------|
|                                                       | **Three                months ended September 30, 2004** |   | **Three                months ended September 30, 2004** |   | **Three                months ended September 30, 2004** |   | **Three                months ended September 30, 2004** |   | **Eliminations** |   | **Three                months ended September 30, 2004** |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                sales                                   | $                -                                       |   | $                940,941                                 |   | $2,674,050                                               |   | $                207,987                                 |   | (207,987)        |   | $3,614,991                                               |
| Cost                of goods sold                          |                                                     |   | 746,880                                                  |   | 2,117,168                                                |   | 87,667                                                   |   | (207,987)        |   | 2,743,727                                                |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Gross                profit                                | $                -                                       |   | $                194,062                                 |   | $                556,883                                 |   | $                (87,667)                                |   |             |   | $                871,265                                 |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Selling                & admin                         | 54,401                                                   |   | 74,171                                                   |   | 324,190                                                  |   | 80,609                                                   |   |             |   | 533,371                                                  |
| Salaries                & contract labor               | 11,728                                                   |   | 61,754                                                   |   | 55,192                                                   |   | -                                                        |   |             |   | 128,674                                                  |
| Depreciation                & amortization             | -                                                        |   | 3,454                                                    |   | 1,320                                                    |   | -                                                        |   |             |   | 4,774                                                    |
| Legal                & professional                    | 500                                                      |   | 6,081                                                    |   | 20,872                                                   |   | -                                                        |   |             |   | 27,453                                                   |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Total                expenses                              | $                66,629                                  |   | $                145,460                                 |   | $                401,573                                 |   | $                80,609                                  |   |             |   | $                694,272                                 |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss) from operations           | (66,629)                                                 |   | 48,602                                                   |   | 155,310                                                  |   | (168,277)                                                |   |             |   | 176,993                                                  |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Interest                expense                            | 50,463                                                   |   | 36,761                                                   |   | 27,891                                                   |   | 5,447                                                    |   |             |   | 120,562                                                  |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss) before income tax expense | $                (117,092)                               |   | $                11,841                                  |   | $                127,419                                 |   | $                (173,723)                               |   |             |   | $                56,431                                  |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Income                tax expense                          | -                                                        |   | -                                                        |   | -                                                        |   | -                                                        |   |             |   | -                                                        |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss)                           | $                (117,092)                               |   | $                11,841                                  |   | $                127,419                                 |   | $                (173,723)                               |   |             |   | $                56,431                                  |

----

|                                                           | **ILNP**                                                     |   | **EMC**                                                      |   | **UNIFIDE**                                                  |   | **TODAY'S                    WAY**                           |   |             |   | **COMBINED**                                                 |
|----------------------------------------------------------------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|--------|------------------|--------|--------------------------------------------------------------|
|                                                           | **Three                    months ended September 30, 2005** |   | **Three                    months ended September 30, 2005** |   | **Three                    months ended September 30, 2005** |   | **Three                    months ended September 30, 2005** |   | **Eliminations** |   | **Three                    months ended September 30, 2005** |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Net                    sales                                   | $                    -                                       |   | $2,010,974                                                   |   | $2,898,830                                                   |   | $                    67,745                                  |   | (67,745)         |   | $4,909,804                                                   |
| Cost                    of goods sold                          |                                                         |   | 1,512,389                                                    |   | 2,023,090                                                    |   | 25,691                                                       |   | (67,745)         |   | 3,493,425                                                    |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Gross                    profit                                | $                    -                                       |   | $                    498,585                                 |   | $                    875,740                                 |   | $                    42,054                                  |   |             |   | $1,416,379                                                   |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Selling                    & admin                         | 76,930                                                       |   | 82,017                                                       |   | 529,248                                                      |   | 41,978                                                       |   |             |   | 730,173                                                      |
| Salaries                    & contract labor               | -                                                            |   | 54,450                                                       |   | 149,472                                                      |   | -                                                            |   |             |   | 203,922                                                      |
| Depreciation                    & amortization             | 12,795                                                       |   | 3,951                                                        |   | 3,939                                                        |   | 8,517                                                        |   |             |   | 29,202                                                       |
| Legal                    & professional                    | 340,830                                                      |   | 2,445                                                        |   | 23,911                                                       |   | -                                                            |   |             |   | 367,186                                                      |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Total                    expenses                              | $                    430,555                                 |   | $                    142,863                                 |   | $                    706,570                                 |   | $                    50,495                                  |   |             |   | $1,330,483                                                   |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Net                    income (loss) from operations           | (430,555)                                                    |   | 355,722                                                      |   | 169,170                                                      |   | (8,441)                                                      |   |             |   | 85,896                                                       |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Interest                    expense                            | 178,870                                                      |   | 37,788                                                       |   | 38,962                                                       |   | 770                                                          |   |             |   | 256,390                                                      |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Net                    income (loss) before income tax expense | $                    (609,425)                               |   | $                    317,934                                 |   | $                    130,208                                 |   | $                    (9,211)                                 |   |             |   | $                    (170,495)                               |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Income                    tax expense                          | -                                                            |   | -                                                            |   | -                                                            |   | -                                                            |   |             |   | -                                                            |
|                                                           |                                                         |   |                                                         |   |                                                         |   |                                                         |   |             |   |                                                         |
| Net                    income (loss)                           | $                    (609,425)                               |   | $                    317,934                                 |   | $                    130,208                                 |   | $                    (9,211)                                 |   |             |   | $                    (170,495)                               |

|                                                       | **ILNP**                                                 |   | **EMC**                                                  |   | **UNIFIDE**                                              |   | **TODAY'S                WAY**                           |   |             |   | **COMBINED**                                             |
|------------------------------------------------------------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|----------------------------------------------------------|--------|------------------|--------|----------------------------------------------------------|
|                                                       | **Three                months ended September 30, 2005** |   | **Three                months ended September 30, 2005** |   | **Three                months ended September 30, 2005** |   | **Three                months ended September 30, 2005** |   | **Eliminations** |   | **Three                months ended September 30, 2005** |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                sales                                   | $                -                                       |   | $2,010,974                                               |   | $2,898,830                                               |   | $                67,745                                  |   | (67,745)         |   | $4,909,804                                               |
| Cost                of goods sold                          |                                                     |   | 1,512,389                                                |   | 2,023,090                                                |   | 25,691                                                   |   | (67,745)         |   | 3,493,425                                                |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Gross                profit                                | $                -                                       |   | $                498,585                                 |   | $                875,740                                 |   | $                42,054                                  |   |             |   | $1,416,379                                               |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Selling                & admin                         | 256,610                                                  |   | 82,017                                                   |   | 529,248                                                  |   | 41,978                                                   |   |             |   | 730,173                                                  |
| Salaries                & contract labor               | -                                                        |   | 54,450                                                   |   | 149,472                                                  |   | -                                                        |   |             |   | 203,922                                                  |
| Depreciation                & amortization             | 12,795                                                   |   | 3,951                                                    |   | 3,939                                                    |   | 8,517                                                    |   |             |   | 29,202                                                   |
| Legal                & professional                    | 161,150                                                  |   | 2,445                                                    |   | 23,911                                                   |   | -                                                        |   |             |   | 367,186                                                  |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Total                expenses                              | $                430,555                                 |   | $                142,863                                 |   | $                706,570                                 |   | $                50,495                                  |   |             |   | $1,330,483                                               |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss) from operations           | (430,555)                                                |   | 355,722                                                  |   | 169,170                                                  |   | (8,441)                                                  |   |             |   | 85,896                                                   |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Interest                expense                            | 344,805                                                  |   | 37,788                                                   |   | 38,962                                                   |   | 770                                                      |   |             |   | 422,325                                                  |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss) before income tax expense | $                (775,360)                               |   | $                317,934                                 |   | $                130,208                                 |   | $                (9,211)                                 |   |             |   | $                (336,429)                               |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Income                tax expense                          | -                                                        |   | -                                                        |   | -                                                        |   | -                                                        |   |             |   | -                                                        |
|                                                       |                                                     |   |                                                     |   |                                                     |   |                                                     |   |             |   |                                                     |
| Net                income (loss)                           | $                (775,360)                               |   | $                317,934                                 |   | $                130,208                                 |   | $                (9,211)                                 |   |             |   | $                (336,429)                               |

**Note      13 - Balance sheet variances since June 30, 2005**

----

|                             | **ILNP**                              |   | **EMC**                               |   | **UNIFIDE**                           |   | **TODAY'S                WAY**        |   |             |   | **COMBINED**                          |
|----------------------------------|---------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|------------------|--------|---------------------------------------|
|                             | **September                30, 2004** |   | **September                30, 2004** |   | **September                30, 2004** |   | **September                30, 2004** |   | **Eliminations** |   | **September                30, 2004** |
|                             |                                  |   |                                  |   |                                  |   |                                  |   |             |   |                                  |
| Total                assets      | $                182,415              |   | $                1,855,927            |   | $                4,289,207            |   | $                409,486              |   |             |   | $                6,737,035            |
|                             |                                  |   |                                  |   |                                  |   |                                  |   |             |   |                                  |
| Total                Liabilities | $                2,743,804            |   | $                1,361,611            |   | $                3,617,645            |   | $                415,464              |   |             |   | $                8,138,524            |

|                                 | **ILNP**                                  |   | **EMC**                                   |   | **UNIFIDE**                               |   | **TODAY'S                    WAY**        |   |             |   | **COMBINED**                              |
|--------------------------------------|-------------------------------------------|--------|-------------------------------------------|--------|-------------------------------------------|--------|-------------------------------------------|--------|------------------|--------|-------------------------------------------|
|                                 | **September                    30, 2005** |   | **September                    30, 2005** |   | **September                    30, 2005** |   | **September                    30, 2005** |   | **Eliminations** |   | **September                    30, 2005** |
|                                 |                                      |   |                                      |   |                                      |   |                                      |   |             |   |                                      |
| Total                    assets      | $                    5,687,534            |   | $                    3,081,318            |   | $                    5,578,700            |   | $                    376,575              |   | (1,745,368)      |   | $                    12,436,630           |
|                                 |                                      |   |                                      |   |                                      |   |                                      |   |             |   |                                      |
| Total                    Liabilities | $                    4,961,818            |   | $                    1,283,712            |   | $                    5,116,976            |   | $                    428,311              |   | (222,974)        |   | $                    11,025,716           |

|                             | **ILNP**                              |   | **EMC**                               |   | **UNIFIDE**                           |   | **TODAY'S                WAY**        |   |             |   | **COMBINED**                          |
|----------------------------------|---------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|------------------|--------|---------------------------------------|
|                             | **September                30, 2005** |   | **September                30, 2005** |   | **September                30, 2005** |   | **September                30, 2005** |   | **Eliminations** |   | **September                30, 2005** |
|                             |                                  |   |                                  |   |                                  |   |                                  |   |             |   |                                  |
| Total                assets      | $                5,687,534            |   | $                3,081,318            |   | $                5,578,700            |   | $                376,575              |   | (1,991,095)      |   | $                12,733,032           |
|                             |                                  |   |                                  |   |                                  |   |                                  |   |             |   |                                  |
| Total                Liabilities | $                5,067,753            |   | $                1,283,712            |   | $                5,116,976            |   | $                428,311              |   | (468,701)        |   | $                11,428,051           |

**Note      14 - Subsequent events**

----