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

For the quarterly period ended September 30, 2005

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

Commission File Number: 000-30646

Industrial Enterprises of America, Inc.

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

(Exact name of registrant as specified in its charter)

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

(212) 490-3100

(Registrant’s telephone number, including area code)

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDING DURING THE PRECEDING FIVE YEARS

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of November 21, 2005, 41,966,187 shares of the registrant’s Common Stock were outstanding.

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

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

This Amendment No. 1 to the Quarterly Report on Form 10-QSB for the quarter ended September 30, 2005 is being filed by Industrial Enterprises of America, Inc., a Nevada corporation (the “Company”), in order to correct a misstatement in the Company’s interest expense. The Company has corrected references to the interest expense in Management’s Discussion and Analysis or Plan of Operations and in the Financial Statements and notes to the Financial Statements.

i

Recent Developments

Potential Acquisition

As disclosed by the Company in a Current Report on Form 8-K filed with the Commission on November 1, 2005, the Company issued a press release on that date announcing that management had signed a letter of intent to acquire one hundred percent (100%) ownership of an automotive holding company. The Company further announced that management believes that a definitive agreement will be reached, and the transaction will likely be consummated, within sixty (60) days of the date of the press release, subject to definitive due diligence and certain other conditions. Once a definitive agreement is in fact reached, the Company will file another Current Report on Form 8-K.

Power3 Dispute

As of November 1, 2005, the Company decided to withdraw its litigation against Power3 Medical Products, Inc., a New York corporation ("Power3"), which purchased all of the Company’s assets in consideration for 15,000,000 shares of the common stock, par value $.001 per share, of Power3 in May 2004. The Company has determined that many of the liabilities that were not assumed or paid off in the Power3 transaction were in fact liabilities of a subsidiary of the Company that was purchased by Power3 when Power3 purchased all of the assets of the Company. As such, the litigation was deemed unnecessary at this time. The litigation was withdrawn without prejudice and the Company can refile the litigation if its position is determined to be improper.

In connection with this determination and dispute, the Company has cancelled the debt of certain former officers, directors and shareholders totaling $699,434 during the quarter ended March 31, 2005 based on a determination that such debt should have been either assumed by Power3 or paid by the shareholder upon consummation of the Power3 transaction.  While the Company believes that it has a valid basis for such cancellation, there can be no assurance that the cancellation of the liabilities will not be disputed. This cancelled debt was comprised of $388,110 of notes payable; $123,382 of accrued interest; $92,663 of credit card debt; and $95,279 of accounts payable to former shareholders. In addition, the Company removed $1,900,000 from its disputed liabilities based on the determination that these liabilities were liabilities of a subsidiary purchased by Power3.

Sale of Securities

As of November 21, 2005, the Company offered and sold to certain accredited investors an aggregate of $2,500,000 worth of convertible promissory notes and warrants to purchase shares of common stock at prices between $.15 and $.175a share. This private placement was conducted through a placement agent, and the commissions to such agent from the offering amounted to 153,900. The purchasers in this private placement represented his or her intention to acquire the securities for investment purposes only and not with a view toward distribution. The sales and purchases in this private placement were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and, specifically, Regulation D thereunder, on the basis that the private placement did not involve a public offering.

Page 1

Board of Directors

As previously disclosed by the Company on a Current Report on Form 8-K filed on October 17, 2005, on October 14, 2005, the Board of Directors of the Company appointed Scott L. Margulis as a new Director of the Company, effective as of October 14, 2005. Mr. Margulis will serve as a Director until the next annual meeting of stockholders or thereafter until his successor is chosen and qualified. Mr. Margulis joined one of the Company’s operating subsidiaries, Unifide Industries, Limited Liability Company, a New Jersey limited liability company (“Unifide”), in 1999.

Additionally, on October 14, 2005, the Board of Directors elected John Mazzuto as the Company’s Chief Executive Officer and President. Mr. Mazzuto will still continue on as the Company’s Chief Financial Officer until a replacement can be found.Mr. Mazzuto will also continue as the Company’s Assistant Secretary. Mr. Mazzuto replaces Crawford Shaw, who stepped down from his position as the Chief Executive Officer and President as of October 14, 2005.

Finally, as previously disclosed by the Company on a Current Report on Form 8-K filed on December 5, 2005, on November 11, 2005 the following individuals were elected to serve on the Board of Directors of the Company by written consent of the shareholders in lieu of an annual meeting: Robert Casper, Jerome Davis, Lou Frey, Scott Margulis and John Mazzuto.

Change in Authorized Shares

As previously disclosed on a Current Report on Form 8-K filed on October 19, 2005, effective as of October 18, 2005, the Company amended its Articles of Incorporation by filing a Certificate of Amendment (the “Amendment”) with the Secretary of State of the State of Nevada. The Amendment changed the number of authorized shares of the Company’s common stock, par value $.001 per share, from 50,000,000 to 150,000,000. Additionally, the Amendment authorized for issuance 10,000,000 shares of preferred stock, par value $.001 per share. The Company’s board of directors is authorized, subject to limitations prescribed by Nevada law and the Company’s Articles of Incorporation,as amended, to determine the terms and conditions of the preferred stock, including whether the shares of preferred stock will be issued in one or more series, the number of shares to be included in each series and the powers, designations, preferences and rights of the shares. The board of directors also is authorized to designate any qualifications, limitations or restrictions on the shareswithout any further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of the Company and may adversely affect the voting and other rights of the holders of the Company’s common stock, which could have an adverse impact on the market price of the Company’s common stock. The Company has no current plan to issue any shares of preferred stock.

Refinancing

On November 7, 2005, the Company secured a $5,000,000 credit facility for its subsidiaries, EMC and Unifide, from Mercantile Business Credit, L.P. of Ardmore, PA. This secured asset based credit facility replaces the Company's existing credit line and provides additional working capital for expanding operations. The credit facility is an annual, renewable facility. This new credit facility results in the Lender Line of Credit from the Balance Sheet of $2,082,445 being categorized as a Long Term Liability instead of a Current Liability going forward.

Page 2

Item 1. Financial Statements.

Critical Accounting Policies

Revenue Recognition  

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

Unifide Industries markets and distributes a full line of automotive aftermarket chemicals. Distribution markets include retail, wholesale, value chains, and private labeling. Unifide brands consist of Unifide (retail), Taylor Made Products (professional), NuEnergy and Phoenix (value). Revenue is recognized with sales to the distribution chain.

Today’s Way Manufacturing is a contract manufacturer of liquid and aerosol products. Currently, Today’s Way is solely producing for Unifide Industries. Revenue is recognized by toll manufacture of products.

All intercompany transactions have been eliminated.

Inventory

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

Machinery and Equipment

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

Accounting for Stock-Based Compensation

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

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

The comparative data included in the Results of Operations and the Liquidity and Capital Resources sections below contain data for the three month period ended September 30, 2004, consisting of pre-acquisition EMC, Unifide and Today’s Way data. The three month period ended September 30, 2005 data consists of post-acquisition EMC, Unifide and Today’s Way data and includes the operations of EMC, Unifide and Today’s Way.

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

Page 3

Revenues for the three months ending September 30, 2005 were $4,909,803and $-0- for the same period in 2004, and reflects the revenue and gross profit derived from EMC’s, Unifide’s and Today’s Way’s operations during the quarter.

Total operating expenses for the three months ending September 30, 2005 were $1,332,714 as compared to $66,628, an increase of $1,266,086. Of this amount, $902,159 was due to the operations of EMC, Unifide and Today’s Way and the balance was due to the Company’s corporate expenses.

Interest expense thus far in 2005 has amounted to $256,390 as compared to $50,463 during the same three month period of 2004.  The increase in interest expense is primarily attributable to the convertible debentures issued to purchase Unifide and Today’s Way.

The result of the above was a net loss for the three months ending September 30, 2005 of $170,495 compared to a loss of $117,091 for the three months ending September 30, 2004. 

Interest expense thus far in 2005 has amounted to $422,325 as compared to $50,463 during the same three month period of 2004.  The increase in interest expense is primarily attributable to the convertible debentures issued to purchase Unifide and Today’s Way.

The result of the above was a net loss for the three months ending September 30, 2005 of $336,430 compared to a loss of $117,091 for the three months ending September 30, 2004. 

Liquidity and Capital Resources

Net cash provided by operations for the three months ending September 30, 2005 was a negative $274,602, compared to a negative cash provided by operations for the three months ending September 30, 2004 of $227,405. This increase in funds used by operations was attributable to the operations of EMC, Unifide and Today’s Way.

Net cash provided by investing activities was $2,890,219 in the three months ending September 30, 2005 as compared to $229,636 for the three months ending September 30, 2004.

Net cash provided by operations for the three months ending September 30, 2005 was a negative $(201,640), compared to a negative cash provided by operations for the three months ending September 30, 2004 of $227,405. This increase in funds used by operations was attributable to the operations of EMC, Unifide and Today’s Way.

Net cash provided by financing activities was $2,817,257 in the three months ending September 30, 2005 as compared to $229,636 for the three months ending September 30, 2004.

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

It should be noted that this Management's Discussion and Analysis or Plan of Operations may contain "forward-looking statements." The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. Although the Company's management believes that such forward-looking statements are reasonable, it cannot guarantee that such expectations are, or will be, correct. These forward-looking statements involve a number of risks and uncertainties which could cause the Company's future results to differ materially from those anticipated, including: (i) the Company's history of ongoing operating losses; (ii) the overall marketplace and clients' usage of EMC's and Unifide’s products, including demand therefore, the impact of competitive technologies, products and pricing, particularly given the substantially larger size and scale of certain competitors and potential competitors, control of expenses, and revenue generated by the acquisition of new customers; (iii) the ultimate consequences of Hurricane Katrina on the supply and/or distribution chain; (iv) the consequent results of operations given the aforementioned factors; and (v) the requirement for the Company to raise additional working capital to fund operations and the availability and terms of any such funding to the Company. Without any such funding, the Company believes it may be forced to curtail operations, and if no alternative to financing, such as an additional merger or acquisition, is consummated, the Company may not continue as a going concern. The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events. Other risks are detailed in the Company’s Annual Report on Form 10-KSB

Page 4

for the year ended June 30, 2005. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation that the strategy, objectives or other plans of the Company will be achieved. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.

Item 3. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures    

The Company's Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (the “Exchange Act”) Rule 13a-15(e)) as of the end of the period being reported (the "Evaluation Date"), has concluded that as of the Evaluation Date, the Company's disclosure controls and procedures, while improving, were still not effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Such officer reached this conclusion because this current filing was delayed. Management has reviewed the recommendations set forth in a letter from the Company’s auditors and are still implementing such recommendations to bring the Company’s disclosure controls and procedures in line with such recommendations. The Company’s independent auditors have made a number of recommendations including, but not limited to, the following: (i) the Company should improve accounting controls through the formalization of accounting practices through promulgation of accounting policies and procedures, and (ii) additional recommendations related to improving internal controls through the separation of duties within the accounting function. Management has hired outside consultants to help with this process and believes that improvements are being made.

Changes in Internal Controls

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

PART II

Item 1. Legal Proceedings.

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

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

The following sets forth information relating to all sales of our common stock during the quarter ended September 30, 2005, which sales were not registered under the Securities Act.

During the quarter ended September 30, 2005, the Company sold an aggregate of 6,633,900 shares of its common stock/securities convertible into its common stock in a private placement to accredited investors as well as for accrued interest and services rendered, at prices between $0.10 and $0.20 per share. Each of the purchasers in this private placement represented his or her intention to acquire the securities for investment only and not with a view toward distribution. None of the shares of the Company’s common stock were sold through an underwriter and there

Page 5

were no underwriting discounts or commissions involved. These sales and purchases in the private placement were exempt from registration under the Securities Act pursuant to Section 4(2) and the regulations promulgated thereunder, on the basis that the private placement did not involve a public offering. Additionally, the Company issued 6,000,000 shares of its common stock in connection with the acquisition of Unifide and Today’s Way.

Other than the securities mentioned above, the Company did not issue or sell any securities during the quarter ended September 30, 2005.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

Please see “Recent Developments” on page 1.

Item 6. Exhibits.

Exhibit Index

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

Page  6

Signatures

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

Industrial Enterprises of America, Inc.

(Registrant)

Date: December 27, 2005

By: /s/ John D. Mazzuto

John D. Mazzuto, Chief Financial

Officer, President, Chief Executive Officer

Page 7

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

F- 1

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

F-2

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

F-3

Industrial Enterprises of America, Inc.

Notes to Interim Financial Statements

Note 1 - Basis of presentation

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

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

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is recommended that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-KSB for the year ended June 30, 2005.

Note 2 - Inventory

As of September 30, 2005, inventory consisted of the following:

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

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Repairs and maintenance, which are not considered betterments and do not extend the useful life of property, are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the asset and accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in income. The ranges of estimated useful lives used in computing depreciation are as follows:

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

F-4

Property and equipment, consisting primarily of molds, tools, and office equipment, additions for the three months ended September 30, 2005 totaled $25,816.

	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

Depreciation for the three months ended September 30, 2005, totaled $16,128.

Note 4 - Goodwill

Goodwill is the result of the acquisitions of EMC Packaging (October 2004), Unifide Industries (July 2005), and Today’s Way Manufacturing (July 2005). The following outlines the calculations for goodwill related to these acquisitions:

	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

Amortization expense related to goodwill for the three months ended September 30, 2005, and 2004, were $-0- and $-0-, respectively.

Note 5 - Earnings per share

Basic earnings per share (EPS) includes dilution and is determined by dividing income available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted EPS reflects the potential dilution that could occur if options and other contracts to issue shares of common stock were exercised or converted into common stock. There are warrants to issue an additional 16,334,780 shares as of September 30, 2005, and -0- as of September 30, 2004. None of the warrants have been exercised as of September 30, 2005.

Note 6 - Stock based compensation

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

F-5  

For the Three Months Ended

September 30

	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)

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

Steven Rash, a former CEO, was granted 825,000 shares of common stock at $0.80 per share for a charge of $660,000 against operations for the quarter ended September 30, 2003. In addition, pursuant to Mr. Rash’s September 5, 2003, employment contract, an option agreement for an additional 200,000 shares at the exercise price of $0.80 was promised, but as yet not executed. No charge to current operations has been made for the unexecuted option. These options are not anticipated to be executed. As of September 30, 2005, and in connection with the disputed liabilities related to the dispute between the Company and Power 3 Medical Products, Inc. (Power3) (Please see “Recent Development - Power3 Dispute in the Company’s 10-KSB for the year ended June 30, 2005), the Company elected to suspend the shares of common stock previously issued to Mr. Rash while it investigates whether Mr. Rash (i) breached his fiduciary duties while holding the position of officer of the Company, and (ii) perpetrated a fraud on the rights of the other Company stockholders in connection with the Company’s sale of all of its assets to Power3. At the time of the sale of assets to Power3, Mr. Rash owned approximately 3.92% of the Company’s common stock.

Disclosures required by Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), including pro forma operating results had the Company prepared its financial statements in accordance with the fair value based method of accounting for stock- based compensation prescribed therein are shown below. There are 955,000 stock options granted and outstanding as of September 30, 2005, issued in connection with the acquisitions of Unifide Industries, LLC and Todays Way Manufacturing, LLC.

The following table summarizes the pro forma operating results of the Company for September 30, 2005, had compensation costs for the stock options granted to employees been determined in accordance with the fair value based method of accounting for stock based compensation as prescribed by SFAS No. 123.

Proforma net (loss) available to common stockholders$ (170,495)

Proforma basic and diluted gain per share$ (0.00)

Proforma net (loss) available to common stockholders$ (336,430)

Proforma basic and diluted gain per share$ (0.01)

As of September 30, 2005, warrants for 16,334,780 shares of common stock have not been exercised.

Note 7 - Interest Expense

The Company recorded interest expense totaling $256,390 and $50,463 for the three months ended September 30, 2005 and 2004, respectively.

The Company recorded interest expense totaling $422,325 and $50,463 for the three months ended September 30, 2005 and 2004, respectively.

Note 8 - Related party transactions

At September 30, 2005 and 2004, the corporation had incurred payables to one of the officers for various operational related expenses in the amount of $296,400 and $-0-, respectively.

At September 30, 2005 and 2004, the corporation had incurred payables to certain officers for various operational related expenses in the amount of $697,462 and $-0-, respectively.

F-6

The Company has notes payable to the following related parties:

	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

Included in the table below are the changes in common shares since June 30, 2005. See Note 6 for discussion of mergers and acquisitions affecting common shares.

	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

On June 1, 2005, the Company’s Board of Directors approved a merger with Unifide Industries, Limited Liability Company, a New Jersey limited liability company. One hundred (100%) percent of the Membership Interests of Unifide were acquired in exchange for $800,000 in cash, $1,200,000 in promissory notes, common stock valued at $1,050,000 as of July 10, 2005, and 200,000 options to purchase 200,000 shares of the Company’s common stock at a purchase price of $0.40. The options are not vested until two (2) years of employment after the date of closing. The options expire ten (10) years after the Closing Date. The agreement was finalized on July 1, 2005, at which time all of the assets, liabilities and operations of Unifide were acquired. Reference is made to that Form 8K filed by the Company on July 18, 2005, as related to Unifide Industries LLC.

On June 1, 2005, the Company’s Board of Directors approved a merger with Todays Way Manufacturing, LLC, a New Jersey limited liability company. One hundred (100%) percent of the Membership Interests of Todays Way were acquired in exchange for $200,000 in cash

F-7

, $300,000 in promissory notes, common stock valued at $450,000 as of July 10, 2005, and 755,000 options to purchase 755,000 shares of the Company’s common stock at a purchase price of $0.23. The options expire on May 31, 2015. The agreement was finalized on July 1, 2005, at which time all of the assets, liabilities and operations of Unifide were acquired. Reference is made to that Form 8K filed by the Company on July 18, 2005, as related to Today’s Way Manufacturing LLC.

Note 11 - Disputed Liabilities and Cancellation of Debt

On November 28, 2005, the Board of Directors of the Company, based on legal and accounting research, concluded that the approximately $1,900,000 should be removed from the Company’s disputed liabilities. It was concluded that in the Power3 transaction, many of the liabilities of the Company were actually assumed by Power3 when Power3 purchase the stock of a subsidiary of the Company, Advanced Bio/Chem, Inc. (Texas) (“AVBC Texas”). Power3 purchased all of the assets of the Company in the transaction and the stock of AVBC Texas was one of those assets. The liabilities being removed were liabilities of AVBC Texas and should not have been reflected as liabilities of the Company following the Power3 transaction.

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

The following unaudited data reflects the combined operations of the Company and its subsidiaries as of September 30, 2004.

	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

F-8

The following unaudited data reflects the combined operations of the Company and its subsidiaries as of September 30, 2005.

	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

Cash has increased by more than $440,000, principally from the issuance of debt and operational activities. It did increase by $20,000 from the issuance of stock and $20,000 from stock subscriptions. Accounts receivable, inventory, fixed assets, goodwill, line of credit with equipment lessor, accounts payable, and certain debt have increased as a result of the acquisitions of Unifide Industries LLC and Today’s Way Manufacturing LLC as discussed in Note 6 and in the Form 8K filed on July 18, 2005. Equity development fees paid for the assistance in locating equity financing totaled $678,835. Amortization of such fees totaled $12,592. Certain directors, upon their admittance to the Board of Directors, were issued a total of 300,000 shares of common stock in consideration for their services to be rendered to the Company’s Board over the twelve months of their appointment.

F-9

Selected balance sheet data as of September 30, 2004, follows:

	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

Selected balance sheet data as of September 30, 2005, follows:

	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

On November 7, 2005, the Company secured a $5,000,000 credit facility for its subsidiaries, EMC and Unifide, from Mercantile Business Credit, L.P. of Ardmore, PA. This secured asset based credit facility replaces the Company's existing credit line and provides additional working capital for expanding operations. The credit facility is an annual, renewable facility. This new credit facility results in the Lender Line of Credit from the Balance Sheet of $2,082,445 being categorized as a Long Term Liability instead of a Current Liability going forward.

F-10