Industrial Enterprises of America Reports Third Quarter Results

NEW YORK--Industrial Enterprises of America, Inc. (NASDAQ: IEAM), a specialty automotive aftermarket supplier, today announced results for the fiscal third quarter and nine months ended March 31, 2007. Revenue for the third quarter was $17.6 million as compared with $9.0 million for the same period in fiscal 2006. The increase in revenue over last year was partially due to the inclusion of the Pitt Penn Group, acquired January, 2006, and more importantly due to increased production capabilities.

For the period ended March 31, 2007, Management has determined that its inventory accounting method for the Pitt Penn and Unifide subsidiaries needed to be corrected from average cost accounting to FIFO (First In, First Out). Absent the accounting correction, results for the third quarter would have been a gross profit of $4.8 million, representing a gross margin of 27.3%, and EBITDA (earnings before interest, taxes, depreciation and amortization) of $3.7 million, or $0.29 per share, calculated using the treasury method, or 13 million shares as of March 31, 2007.

As a result of this correction in inventory accounting, cost of goods sold for the third quarter was $0.9 million higher than it would have been under the prior methodology. Reported gross profit for the third quarter was $3.9 million, representing a gross margin of 22.2%, versus a loss of $(1.9) million in the third quarter of last year. EBITDA was $2.8 million, or $0.22 per share. The net loss for the three months ending March 31, 2007 includes approximately $9,300,000 in non-cash charges.

For the first nine months of fiscal 2007, Industrial Enterprises of America reported revenue of $41.6 million versus $19.6 million in the same period last year, reflecting the acquisition of Pitt Penn and increased demand for its automotive products. Gross profit was $11.4 million, representing a gross margin of 27.4%, versus $0.9 million, or 4.4%, for the same period in fiscal 2006. EBITDA was $6.8 million, or $0.52 per share. The net loss for the nine month period was $6.7 million, versus a loss of $7.4 million for the first nine months of fiscal 2006.

“We are very pleased with our overall financial results, with EBITDA on target prior to the inventory accounting correction. Revenues were lower than previously guided due to mild weather during the quarter, and a higher than expected number of contract packaging contracts which recognize only processing fees,” commented John Mazzuto, Chief Executive Officer of Industrial Enterprises of America. “During the fiscal third quarter, the company increased unit through-put by approximately 30% through improved operating efficiencies and additional manufacturing shifts. Our order flow continues to outpace shipments, and we will continue to leverage our production capacity and look at opportunistic acquisitions that can improve our asset utilization.”

On December 11, 2006 the company announced a $10 million buyback program. To date the company has repurchased over $5 million worth of stock. The board of directors is currently considering increasing the buyback program given the company's current valuation.

Management believes that EBITDA is the performance measure that best reflects the company’s economic value and provides investors with a consistent metric to track historical results and monitor future results. In providing guidance, management assumes normal weather patterns. The company makes use of EBITDA (earnings before interest, taxes, depreciation and amortization) as a financial measure which it believes is a useful performance indicator. EBITDA is not a recognized term under generally accepted accounting principles, or "GAAP," and should not be considered as an alternative to net income/(loss) or net cash provided by operating activities, which are GAAP measures.

Conference Call

Industrial Enterprises of America will host an earnings conference call at 9:00 a.m. Eastern on May 22, 2007 for the company’s fiscal third quarter ended March 31, 2007. During the call, John Mazzuto, Chief Executive Officer, will discuss the company’s quarterly performance and financial results. The telephone number for the conference call is 877-407-0782. The call will be webcast and can be accessed at http://www.investorcalendar.com and the company’s website.

Investors will be able to access an encore recording of the conference call for one week by calling 877-660-6853 and referencing account number 286, conference number 241087; the recording will be available two hours after the conference call has concluded. In addition, a replay of the webcast will be available for 180 days after the call on http://www.investorcalendar.com.

About Industrial Enterprises of America

Industrial Enterprises of America, Inc., headquartered in New York, NY, is an automotive aftermarket supplier that specializes in the sale of anti-freeze, auto fluids, charcoal fluids, and other additives and chemicals. The company has distinct proprietary brands that collectively serve the retail, professional and discount automotive aftermarket channels.

Except for the historical information contained herein, the matters discussed in this press release may include forward-looking statements or information. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of Industrial Enterprises of America set forth herein and those preceded by or that include the words ``believes,'' ``expects,'' ``given,'' ``targets,'' ``intends,'' ``anticipates,'' ``plans,'' ``projects,'' ``forecasts'' or similar expressions, are forward-looking statements. 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 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 generation by the acquisition of new customers; Other risks are detailed from time to time in the Company's 2006 Annual Report on Form 10-K, as amended, its Quarterly Reports on Form 10-QSB, and in its other Securities and Exchange Commission reports and statements. The Company assumes no obligation to update any of the information contained or referenced in this press release.

-- Tables to follow --

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

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

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

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