Industrial Enterprises of America Inc fka IEAM

[uranium-pinto-beans]

IEAM running WOOOOOOOOOO HOOOOOOOOOOO!@

[uranium-pinto-beans]

IEAM huge insider buys giddy up!!!!!!!!!!!!!

[uranium-pinto-beans]

huge insider buying at $4 and $5!!!! we won't be under $1 long IMO!

[uranium-pinto-beans]

IEAM the last time this stock dropped it went from $7 + to below $3 on earnings.

if i recall correctly the CEO ended up buying in excess of $300k worth of company stock.

the company then authorized a share buy back program. This was at $3 a share.

I don't think they'll let this fall any further IMO!

[uranium-pinto-beans]

IEAM giddy up!!!!!!!!!!!

[asdfg12345]

Good luck Mr. Joseph Gentile, esq. It will be like getting blood from a turnip.
Though there never has been a company more deserving of your attention!

[asdfg12345]

This company is done.
The bull story had always been the cheap multiple against EBITDA with which this stock traded.
With yesterdays announcement, we learn that they were not representing a real EBITDA!

In the last quarter they reported, march 2007, 17.6mm of sales with 2.9mm of EBITDA. The restatement caused by bill and hold removes 4.9mm of sales and 3.5mm of EBITDA!!! EBITDA is now negative. So there goes the stock trading at a value!

Add to the fact that the share count is now 2 times as high as they said it would be at the end of the forth quarter!!

And if they are really going to borrow money to buy back shares, they will run this company straight into the ground!

26mm shares compared to the "targeted share count of 13mm"

put a fork in this company, it is done

[linuspop]

What a disaster this stock turned out to be.

Industrial Enterprises Provides Accounting Update

NEW YORK, Nov 7, 2007 (PrimeNewswire via COMTEX) -- Industrial Enterprises of America, Inc. (Nasdaq:IEAM) today provided an update on its accounting review for the Company's fiscal year ended June 30, 2007, and made certain other announcements.
During the year-end annual audit, it has come to the Company's attention that a supplier to the Company may be required to be accounted for as a Variable Interest Entity (VIE) due to the fact that the Company is its sole customer. Based upon further evaluation by both the Company and its auditors, the VIE does not appear to be material to the overall operations of the Company and consequently does not appear to require an audit or to be consolidated into the Company's financials. The Company's previous auditors are now reviewing this relationship during the fiscal 2006 time period and are evaluating whether the VIE needs to be consolidated into the Company's fiscal 2006 financials. Company management believe that the auditors will concur with the 2007 accounting treatment of the VIE, but no conclusion has yet been made. Management cautions that the filing of the 2007 Form 10KSB is contingent upon the Company filing the restated 2006 annual report.

Also, during the Company's internal review of its accounting policies, it has determined that its reserve for current litigation should be increased by an additional $9.5 million, to $13.5 million.

Additionally, the Company has determined, after reviewing its bill and hold transactions for fiscal 2007, that the Company did not properly follow GAAP revenue recognition procedures. Therefore, the bill and hold transactions for the quarter ended December 31, 2006 in the amount of approximately $3.1 million will be cancelled, and the bill and hold sales for the quarter ended March 31, 2007 in the amount of $4.9 million will also be cancelled. Such bill and hold sales represented $1.3 million of EBITDA in the quarter ended December 31, 2006 and $3.5 million of EBITDA in the quarter ended March 31, 2007. Also, the bill and hold transactions that were to take place in the 4th quarter have been cancelled. These sales would have accounted for EBITDA in excess of $1.5 million. Based on the cancellation of the fourth quarter bill and hold sales, the EBITDA guidance for the quarter is no longer applicable. Of the total cancelled bill and hold revenue, $1.6 million will be reflected in the first quarter of 2008 representing $1.1 million in EBITDA and $1.2 million in revenue will be recorded in the second quarter of 2008 representing EBITDA of approximately $400,000. The margins on these sales were unusual because the Company was able to sell finished goods inventory that the Company had purchased at distress prices. It is expected that the Company's customers will continue to execute bulk transactions in the future; however, the margins from the previous bill and hold transactions are not sustainable.

All bill and hold purchases were paid in full, and cash was received prior to June 30, 2007, but because the buyers were unable to take delivery of their merchandise, the Company was forced to cancel these transactions and will reflect an approximate $8 million in liabilities on its books at the year ended June 30, 2007. The buyers of the bulk purchases have agreed to settle their potential claims for these cancelled sales for 2.4 million shares of restricted stock and the above purchase and delivery of product. This settlement will remove the liability during the second quarter ended December 31, 2007. Additionally, Industrial Enterprises has the option to repurchase these shares at current market prices.

The Company also wishes to announce the settlement of all pending litigations with Trinity Bui and Trinity Financing Investments Corp. (TFIC), relating primarily to certain convertible notes and warrants issued to Ms. Bui and TFIC. Pursuant to the settlement agreement, the parties have exchanged releases and will dismiss all outstanding claims and counterclaims with prejudice. The Company has paid $500,000 in cash and has issued 870,000 shares of common stock, representing the conversion of certain notes, the exercise of a warrant, and other consideration. The shares issued are freely tradable but are subject to certain daily transfer restrictions. Under terms of the settlement, all notes issued to Ms. Bui and TFIC have been converted and/or cancelled, and all unexercised warrants will remain valid and exercisable, including certain warrants (those issued on or before July 15, 2004) that had been taken off of the Company's books but which will now be placed back on the books.

Also, during the year end annual audit, it was determined that certain litigation expenses paid by the Company's CEO John Mazzuto, in defense of litigation against the Company and Mr. Mazzuto personally, were not recorded as an expense by the Company and that such expenses should be reimbursed to Mr. Mazzuto. The Company and its auditors have determined that such payments should have been recorded as an expense by the Company and reflect a liability to repay Mr. Mazzuto approximately $1.2 million. Mr. Mazzuto has agreed to accept 500,000 shares of restricted stock as settlement for these paid legal expenses.

According to Dan Redmond, President and COO, "Current management has recommended and the board has approved the decision to use our common stock as settlement for these liabilities so as to not drain future cash flow and over burden future operations."

The resulting issued and outstanding stock will amount to 26 million shares outstanding following the above transactions. This is an increase of 7 million shares over the previous 19 million shares announced in the Company's July 12, 2007 press release. The increase in shares outstanding can be attributed to the 4 million shares as detailed above and an additional 3 million issued since June 30, 2007. Since the year-ended June 30 2007, 1.65 million shares have been issued as a result of note conversions and warrant exercises, 850,000 shares have been issued to consultants and for severance costs and 500,000 shares have been issued to John Mazzuto. These shares were authorized by the board of directors in December 2006, but not issued until after the 2007 fiscal year at the request of Mr. Mazzuto.

With the addition of settlement shares, the Company's target shares outstanding has increased to 18 million shares from the 14 million previously indicated. The Company is in the process of retaining new securities counsel and will resume repurchases when it is deemed appropriate. The Company plans to continue to buy back shares at a slow but consistent pace. The Company still has approximately $25 million left remaining in its buyback program.

According to CEO John Mazzuto, "We take our responsibility to provide complete and accurate financial information seriously and are taking proactive steps that we believe are appropriate under these circumstances. Given the current price of the Company's common stock, the Company will add additional debt over and above the $10 million recently added, to increase the pace of the share buyback as well as to expand operations."

[retired_by_31]

"But 'the liquidated damages and green shoe penalties were agreed to by the company in order to convince convertible debt holders to convert their notes into shares' seems unusual and excessive."

I agree. IEAM essentially paid $5,000,000 to dilute the shares, kill the share price, and destroy investor confidence. Not a savvy move on JDM's part, but I bet he was never going to tell us about it.

I wonder what happened behind the scenes. I bet Pike threatened to replace the whole BOD if not pursue SEC avenues, unless they removed JDM. Pike has too much too lose.

[linuspop]

Looks like people agree. I like how they broke down what accounted for the ballooning sharecount. I can understand the the shares issued for conversion of debentures, as well as the shares issued for warrants and options. But "the liquidated damages and green shoe penalties were agreed to by the company in order to convince convertible debt holders to convert their notes into shares" seems unusual and excessive. (?) Also, the 1 millions shares for finder's fees and grants seems like a lot to me.

Hopefully today begins a shift towards more transparency with Redmond as President. I have lessened the amount of IEAM I own, but this is still a large position for me. Willing to ride it out and holding my remaining shares with bated breath....


"The company will experience a net loss in the fourth quarter due to derivative and interest expenses as has been consistent throughout the fiscal year. It is expected that these expenses, with the conversion of most of the convertible debt, will be significantly lower during fiscal 2008. Also, as mentioned in the prior press release, the shares outstanding increased during the fourth quarter from approximately 13.3 million to approximately 19.5 million shares outstanding. During the quarter, approximately 2.8 million shares were issued for the conversion of debentures, approximately 1.4 million shares were issued for the exercise of warrants and options, approximately 1.0 million shares were issued for liquidated damages and green shoe penalties, and approximately 1.0 million shares were issued for finder's fees and as employee stock grants. The liquidated damages and green shoe penalties were agreed to by the company in order to convince convertible debt holders to convert their notes into shares of stock of the company. These amounts were not previously disclosed as they were too contingent to value. The cash that was generated from operations and from the warrant and options exercises was used to pay down the existing credit facility at the Pitt Penn subsidiary. The credit facility was inherited by the company during its acquisition of Pitt Penn last year. The company is in the process of replacing the credit facility with one that has more favorable terms to the company."

[retired_by_31]

Best news ever!

I bet Pike wanted JDM out, asap.

[linuspop]

Industrial Enterprises Appoints Dan Redmond as President and Chief Operating Officer
Friday July 20, 9:00 am ET


NEW YORK--(BUSINESS WIRE)--Industrial Enterprises of America, Inc. (NASDAQ: IEAM - News), a specialty automotive aftermarket supplier, today announced that its Board of Directors has appointed Robert "Dan" Redmond as president and chief operating officer of the company, responsible for all day-to-day operations and reporting to the chief executive officer. John Mazzuto, previously president and chief executive officer, will remain as chief executive officer and will continue to provide strategic guidance to the company and manage its financial reporting process.

Mr. Redmond joined Industrial Enterprises in April, 2007 as executive vice president of Industrial Enterprises and president of Pitt Penn, having previously been employed by Chemtura Corporation, where he managed 12 manufacturing facilities and 1,800 employees. During his three months at Pitt Penn, Mr. Redmond has incorporated lean manufacturing techniques, increased throughput and capacity utilization, and streamlined the corporate infrastructure.

"I have planned on relinquishing day-to-day operating responsibility for some time to focus on the long-term strategic planning for the company and I am happy that the Board has decided to move in this direction," stated John Mazzuto, chief executive officer.

"With Industrial Enterprises now approaching $70 million in annualized revenue, the Board felt it was appropriate to transition to a more operational management team from an entrepreneurial one. Since joining, Dan Redmond has made an important impact at the company, and we believe he has the right operating experience to take over the day-to-day operations - with a focus on increasing revenue, margins, and cash flow," stated Bob Casper, chairman of the Board of Directors.

"At the same time, we want to thank John Mazzuto for building Industrial Enterprises into what it is today, aggregating several underperforming businesses into a growing leader in its field with very little debt and a strong balance sheet. The Board's decision today represents the first in a number of actions contemplated to strengthen the management team of Industrial Enterprises and enhance transparency of the company's operations and financial performance going forward - to ensure we are well positioned for improved bottom line performance in fiscal 2008. The Board expects that these moves will aid in generating free cash flow to fund the company's previously announced extended stock buy back program.

"Finally, the company's current chief financial officer, Dennis O'Neill, is still ill and unable to return to work. We are continuing to search for a qualified CFO in case Dennis O'Neill is unable to return to work in this capacity."

Clarification of July 12, 2007 Press Release

The $4 million in anticipated earnings forecasted for the fourth quarter (up from $3.7 million last quarter) as referenced in the press release was calculated based on EBITDA. EBITDA (earnings before interest, taxes, depreciation and amortization) is 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. A reconciliation of EBITDA to net income/(loss) appears at the end of this release, as do both actual results for the quarter and year-to-date periods.

The company will experience a net loss in the fourth quarter due to derivative and interest expenses as has been consistent throughout the fiscal year. It is expected that these expenses, with the conversion of most of the convertible debt, will be significantly lower during fiscal 2008. Also, as mentioned in the prior press release, the shares outstanding increased during the fourth quarter from approximately 13.3 million to approximately 19.5 million shares outstanding. During the quarter, approximately 2.8 million shares were issued for the conversion of debentures, approximately 1.4 million shares were issued for the exercise of warrants and options, approximately 1.0 million shares were issued for liquidated damages and green shoe penalties, and approximately 1.0 million shares were issued for finder's fees and as employee stock grants. The liquidated damages and green shoe penalties were agreed to by the company in order to convince convertible debt holders to convert their notes into shares of stock of the company. These amounts were not previously disclosed as they were too contingent to value. The cash that was generated from operations and from the warrant and options exercises was used to pay down the existing credit facility at the Pitt Penn subsidiary. The credit facility was inherited by the company during its acquisition of Pitt Penn last year. The company is in the process of replacing the credit facility with one that has more favorable terms to the company.

[retired_by_31]

Does anyone have a saved file of the older conference calls?

[retired_by_31]

Remember the guy that was inaccurate and stated that IEAM traded at 4 times earnings (impossible with negative GAAP net income):

http://www.sec.gov/news/digest/2007/dig012307.txt

Here's a little about our beloved CEO:

"Strupp and Mazutto bought the brewery from the Stroh Brewery Co. for $10.5 million in November 1999 and renamed it the City Brewery, its original name when founded by Gottlieb Heileman and John Gund back in 1858."

Less then a year later:

"Owners Jim Strupp and John Mazzuto lost control of the brewery last month after a judge found the brewery in default on a $4.5 million loan to Congress Financial Corp. and ordered a foreclosure. La Crosse attorney George Parke III took possession of the premises and oversees the operation as receiver."

http://findarticles.com/p/articles/mi_m3469/is_38_51/ai_66307255

In addition, for those with access to PACER, check out:

U.S. Bankruptcy Court
Southern District of New York (Manhattan)
Bankruptcy Petition #: 02-15586-rdd

[abh3vt]

There was a decision reached in the Trinity Bui case vs IEAM. The details are here:

http://decisions.courts.state.ny.us/fcas/FCAS_docs/2007JUL/3001172902005005SCIV.pdf

It looks like the judge decided in favor of both plaintiff and defendant; I didn't take the time to see how many shares might have been awarded to Bui.

[abh3vt]

Hi Mike,

Thanks very much for that info. I'm not sure how I missed that before in the 10k.....here is the full info:

Note 8. Notes Payable


The Company has notes payable to the following:


June 30, 2006 June 30, 2005
Unrelated third party, unsecured, 60% interest, due July 16, 2005 $ - $250,000
Unrelated third party, secured by receivables and inventory, interest payable with 37,500 of Company shares, due February 3, 2006. 25,000 -
Allstate, secured, 13% interest, due December 2, 2006 110,472 32,621
Allstate, secured, 13% interest, due December 2, 2006 87,761 -
First Capital, secured by accounts receivable, 7.25% interest, due January 18, 2006 - 448,535
First Capital, secured by inventory, 7.25% interest, due June 17, 2006 - 105,551
PNC Bank, secured by accounts receivable and inventory, 10.5% interest, due November, 2008 1,039,020 -
PNC Bank, secured by accounts receivable and inventory, 10.5% interest, due November, 2008 7,253,177 -
Mercantile Bank, secured by accounts receivable and inventory, 9.5% interest, due November 2006 279,343 -

$8,794,773 $835,707



During the year ended June 30, 2006 and June 30, 2005, the Company recorded interest expense totaling $4,770,651 and $526,437, respectively.


On July 8, 2005, the Company received $500,000 as convertible debt with detachable warrants. The notes bear interest at 8% and are due in July, 2006. There was an outstanding balance at June 30, 2006, of $500,000. The notes are convertible into 185,186 common shares of the Company’s common stock, par value $0.01 per share at the rate $2.70 per share. Detachable warrants for 80,891 common shares at a rate of $3.00 per common share were issued in conjunction with this debt. The warrants expire in July, 2010.


On July 19, 2005, the Company received $1,210,000 as convertible debt with detachable warrants. The notes bear interest at Wall Street prime plus four (4) points, not less than 8%, and are due in July, 2007. There was an outstanding balance at June 30, 2006, of $1,104,856. The notes are convertible into 605,000 common shares of the Company’s common stock, par value $0.01 per share at the rate $2.00 per share. Detachable warrants for 1,125,002 common shares at a rate of $2.85 per common share were issued in conjunction with this debt. The warrants expire in July, 2010.


On August 11, 2005, the Company received $50,000 as convertible debt with detachable warrants. The notes bear interest at 8%, and are due in August, 2006. There was an outstanding balance at June 30, 2006, of $50,000. The notes are convertible into 18,519 common shares of the Company’s common stock, par value $0.01 per share at the rate $2.70 per share. Detachable warrants for 4,630 common shares at a rate of $3.00 per common share were issued in conjunction with this debt. The warrants expire in August, 2010.


On August 17, 2005, the Company received $20,000 as convertible debt with detachable warrants. The notes bear interest at 8%, and are due in August, 2006. There was an outstanding balance at June 30, 2006, of $20,000. The notes are convertible into 7,407 common shares of the Company’s common stock, par value $0.01 per share at the rate $2.70 per share. Detachable warrants for 1,852 common shares at a rate of $3.00 per common share were issued in conjunction with this debt. The warrants expire in August, 2010.


On November 2, 2005, the Company received $500,000 as convertible debt with detachable warrants. The notes bear interest at Wall Street plus four (4) points, not less than 8%, and are due in November, 2007. There was an outstanding balance at June 30, 2006, of $500,000. The notes are convertible into 333,333 common shares of the Company’s common stock, par value $0.01 per share at the rate $1.50 per share. Detachable warrants for 333,334 common shares at a rate of $1.75 per common share were issued in conjunction with this debt. The warrants expire in November, 2010.


On January 27, 2006, the Company received $5,000,000 as convertible debt with detachable warrants. The notes bear interest at Wall Street plus four (4) points, not less than 8%, and are due in July, 2008. There was an outstanding balance at June 30, 2006, of $5,000,000. The notes are convertible into 2,777,778 common shares of the Company’s common stock, par value $0.01 per share at the rate $1.80 per share. Detachable warrants for 2,224,168 common shares at a rate of $2.40 per common share and 553,612 common shares at a rate of $3.40 were issued in conjunction with this debt. The warrants expire in January, 2009.


F-14
--------------------------------------------------------------------------------



INDUSTRIAL ENTERPRISES OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


On March 8, 2006, the Company received $1,950,000 as convertible debt with detachable warrants. The notes bear interest at Wall Street plus four (4) points, not less than 8%, and are due in September, 2008. There was an outstanding balance at June 30, 2006, of $1,950,000. The notes are convertible into 1,083,333 common shares of the Company’s common stock, par value $0.01 per share at the rate $1.80 per share. Detachable warrants for 545,698 common shares at a rate of $2.40 per common share, and 545,698 common shares at a rate of $3.40 per common share were issued in conjunction with this debt. The warrants expire in March, 2009.


On March 14, 2006, the Company converted $98,494 accrued interest into convertible debt with detachable warrants. The notes bear interest at Wall Street plus four (4) points, not less than 8%, and are due in September, 2008. There was an outstanding balance at June 30, 2006, of $98,494. The notes are convertible into 54,719 common shares of the Company’s common stock, par value $0.01 per share at the rate $1.80 per share. Detachable warrants for 50,001 common shares at a rate of $2.40 per common share, and 50,001 common shares at a rate of $3.40 per common share were issued in conjunction with this debt. The warrants expire in March, 2009.


The Company has a $5,000,000 revolving bank line of credit that expires in November, 2006. Advances under the line of credit bear interest at 9% and are secured by inventories and accounts receivable. Under the terms of the line of credit agreement, the Company is required to maintain certain minimum working capital, net worth, profitability levels, and other specific financial ratios. In addition, the agreement prohibits the payment of cash dividends and contains certain restrictions on the Company’s ability to borrow money or purchase assets or interests in other entities without the prior written consent of the bank.


The Company has a $10,000,000 revolving bank line of credit that expires in November 12, 2007 unless extended. All borrowings are collateralized by substantially all assets of the Company. The outstanding balance on the line of credit was $1,039,020 and $-0- at June 30, 2006 and 2005, respectively. Borrowings under the line are subject to certain financial covenants and restrictions on indebtedness, dividend payments, financial guarantees, business combinations, and other related items. As of June 30, 2006, the Company is in compliance with all covenants.

----------------------------------------

When I added all the detachable warrants and convertible notes, I calculated that if fully exercised, not factoring the treasury stock method, they would amount to 10.58MM shares....some of which may have been included in the 14-15MM share count given in the last Q.

Mazzuto had claimed that he was buying back shares, but how exactly?

[MikeDDKing]

Actually, I should have added that I used the 10-K as well for the notes converted into shares. If you look at note 8 in the 10-K it provides a list of the number of shares that each note will convert into. If you add up all of those number you get 5,109,050.

In the 10-Q under note 12 they indicate that since June 30, 2006 (the date for the 10-K) they have issued 1,755,684 for debt converted to stock. If you subtract 1,755,684 from 5,109,050 you get 3,353,366.

Mike

[abh3vt]

Mike, where did you find this info?

"Going by the financials from last quarter I figure that if all options, warrants, and notes were exercised/converted, there would be an additional 5,591,778 shares added to the share count. This includes 2,037,394 in warrants, 201,018 in options, and 3,353,366 in notes converted to shares.

I'm surprised that the company did not discuss that issue in this note:

Note 7 - 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, warrants and other contracts to issue shares of common stock were exercised or converted into common stock. For the nine months ended March 31, 2007 and 2006, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of the stock options and warrants on the Company’s net loss. There are options to issue an additional 201,018 shares as of March 31, 2007, and 813,750 as of March 31, 2006, each adjusted for the reverse stock split of 10:1 dated June 5, 2006. There are warrants to issue an additional 2,037,394 shares as of March 31, 2007, and 6,813,227 as of March 31, 2006, each adjusted for the reverse stock split of 10:1 dated June 5, 2006.

[MikeDDKing]

I believe the remaining notes and warrants are going to add over 2M additional shares to the share count. That brings the TA total to 25.5M shares before shares start getting retired!

Mike

[abh3vt]

I found this statement by Mazzuto to be a bit misleading:

"Chief Executive Officer John Mazzuto stated, "Moving into fiscal 2008, our balance sheet is stronger than it has ever been, and the potential dilution to our stockholders has been largely eliminated due to the conversion of debt and exercise of warrants. "

Huh?!? I think he meant to say that the dilution is no longer in the "potential" category...it has been realized! LOL...

FDS now up to 19MM, and moving higher...perhaps up to 23MM?
How has dilution been eliminated?

[cl001]

They admitted the shares increased to 19 million. Still much lower than the 23.5 million we discovered.
In addition, how can they buy back ~ 6 million shares? How many debt they need to raise?
This is one confusing company at minimum.

[linuspop]

Here the actual pr. Looks like lower rev ests., increasing buyback. Mazzuto has been losing a lot of credibility and confusing everyone.

Industrial Enterprises Provides Fourth Quarter and Year-End Update
Thursday July 12, 3:05 pm ET
Board of Directors Authorizes $25 million Increase to Share Repurchase Program


NEW YORK--(BUSINESS WIRE)--Industrial Enterprises of America, Inc. (NASDAQ: IEAM - News), a specialty automotive aftermarket supplier, today reported preliminary fiscal fourth quarter financial highlights, including positive changes in its capital structure and balance sheet.



As expected, a majority of the Company's $4.6 million in convertible debt was converted into equity at the end of the quarter, and the Company's overall debt was reduced to less than $3 million from greater than $14 million. Additionally, the total number of warrants outstanding fell to fewer than 500,000 from 2 million. The reduction of convertible debentures and warrants outstanding significantly lowers the potential dilution going forward; however, due to the recent conversion of debt into equity, warrants exercised, and the interest and liquidated damages related to such debt paid in stock, the Company's outstanding share count has temporarily increased to approximately 19 million shares of common stock. The current share count also reflects management's near-term decision to use warrant proceeds to pay down debt instead of buy back shares. Shares outstanding does not include shares repurchased in the Company's share repurchase program, via cash or note, shares that are in the process of being cancelled and shares that have been issued but not earned, which would all be reported by the transfer agent as outstanding.

Due to the improved financial strength of the Company's balance sheet, the Board of Directors has voted to increase the existing share buyback program by $25 million dollars in order to minimize the effect of the debt conversions and to keep the share count consistent with management's prior 13-14 million share guidance. This does not include stock that may be issued as part of future acquisitions.

For the fiscal fourth quarter ended June 30, 2007, financial performance is expected to be on par with previously guided earnings estimates of $4.0 million, although such performance is always subject to auditor adjustments. However, revenues are expected to come in lower than anticipated due to a change in product mix, as previously discussed on the Company's third quarter conference call. Additionally, the Company's accounts receivable balance, which had risen sharply in the previous two quarters due to bulk sales, has been subsequently reduced by those amounts as receivables on the bulk sales have been collected. Actual financial results are expected to be reported sometime in late September.

Chief Executive Officer John Mazzuto stated, "Moving into fiscal 2008, our balance sheet is stronger than it has ever been, and the potential dilution to our stockholders has been largely eliminated due to the conversion of debt and exercise of warrants. I feel we have taken the necessary steps to position IEAM for substantial revenue growth and margin expansion going forward, providing a strong return on investment for our stakeholders. Now that our Board of Directors has authorized an increase in our share repurchase program, we will continue to purchase stock at the appropriate times."

[linuspop]

Industrial Enterprises Puts 4Q Net At $4M, In Line With ViewLast update: 7/12/2007 3:07:02 PM(MORE TO FOLLOW) Dow Jones Newswires

[linuspop]

Industrial Enterprises Puts 4Q Net At $4M, In Line With ViewLast update: 7/12/2007 3:07:02 PM(MORE TO FOLLOW) Dow Jones Newswires

[linuspop]

hmmmm....this is all very strange.

Industrial Enterprises Boosts Shr Buy Back By $25M >IEAMLast update: 7/12/2007 3:05:54 PM

[MikeDDKing]

Yes there was. Although the lion's share of that claim was thrown out. I don't remember how big the remaining part is. In the last conference call they did state that none of the lawsuit claims were in the share count. Possibly that is a portion of the increase in share count from last quarter to present.

Mike

[Guy]

Thanks everyone for the updates. I also got out
earlier. I would rather hear what the company has
to say before/if i ever buy this again.

[abh3vt]

Mike, shmolton, cl001, thanks for all your digging. I am hard-pressed to explain the huge rise in oustanding shares as well and I also sold my remaining shares.

This company has a history of presenting confusing share count data in their financials in the past. This mysterious and dramatic rise in shares should have been more clearly spelled out.

Wasn't there some outstanding litigation against the company from a shareholder who claimed a huge amount of shares as part of an old convertible note??

[cl001]

I bailed out of IEAM as well after talking to the IR and TA. I tried to call the CEO but he is in Europe and can't be reached.
The share count as of today is 23,544,663, another 100K increase from Mike's number yesterday. I also got the number on 3/31, 15,448,034. A lot of shares were issued recently that we don't know. It couldn't be the bond since the total didn't add up.
It could be another deal not announced yet but it would be very strange with CEO in Europe to have a huge deal.
Bottom line is, I don't know and I don't think I want to take this kind of risks. There are many good stocks to hold elsewhere.

[MikeDDKing]

I double checked the IEAM share count at the transfer agent to make sure that they weren't just confused and then sold out after extensive DD. As of yesterday the outstanding share count was 23,444,663 which was slightly higher than shmolton obtained.

I don't know where all of this dilution is coming from. Going by the financials from last quarter I figure that if all options, warrants, and notes were exercised/converted, there would be an additional 5,591,778 shares added to the share count. This includes 2,037,394 in warrants, 201,018 in options, and 3,353,366 in notes converted to shares. The share count listed in the last 10-Q was 14,148,334 (see note 12). Adding 5,591,778 plus 14,148,334 gives me a total of 19,740,112. Consequently, there are 3,704,551 shares that aren't accounted for and the number could be higher because I doubt that all of the options were exercised.

There are a few possible scenarios that could account for the additional shares:
1. I listened to the last CC several times. They talked about a 17M share number. I think what they meant was that there were 17M shares on May 22 when the CC took place. The CEO indicated that the difference between the 17M and the 14.1M number included ~1M additional shares repurchased but not retired and 2M in stock options that were issued but not owned. The stock options were issued for tax reasons (part of an 83B election) but will not be owned for many years because they are tied to performance goals. I think the 2M shares are probably the lions share of the missing 3.7M shares.

2. They may have issued more shares for service.

3. There is a weird statement in an obscure place in the last 10-K that talks about an additional 3M shares. It is located in Note 14. It states "Further, stock valued at $390,000 has been recorded for 3,000,000 shares to be issued to an officer of the Company." I wonder if this is to pay the CEO who hasn't been taking a salary.

4. There could be more stock options issued.

5. They could have done an acquisition that they haven't announced publicly yet.

I spoke with a CPA about this. It is a while since he has done accounting for a public company so he may not be 100% correct. In the last CC what they were talking about seemed to indicate that the share count at the TA and the share count in the financials could be different (e.g. due to notes converted and the shares purchased but the shares are not retired). The CPA was of the opinion that these two numbers should be the same. If he is correct, there could be a big surprise when the next financials come out as the share count could be much higher.

I am really suspicious of this whole situation so I decided to bail. I don't think they can afford to repuchase 10M shares to keep the share count at 13M as they discussed in the last CC. Maybe they do have the whole thing under control and I'm wrong but I don't think it is worth the risk.

Mike

[shmolton]

Yep.

[retired_by_31]

What we need is an 8K or a PR, so we can trade based on the info.

[shmolton]

I don't think there can be much more selling than there has been, and there has obviously been buyers, so the selling may end tomorrow and the stock may fly. I spoke with Sue Baron at Compushare 303-262-0600, if you'd like to verify. This could be an overlap of conversions before the company has bought them back, but I can't seem to figure out how they will buyback over 10 milliion shares to get the o/s back to 13 million.

[retired_by_31]

If that is accurate, then Capital Guardian owns 7% less of IEAM than it thought. Your information could spark a strong sell-off, if varified.

[shmolton]

I sold out today after speaking with TA yesterday...

The o/s as of yesterday was 23,361,412. After some coersion I got her to get out the book and give me the o/s on 7/2(23,286,412) and 6/29(22,946,602), she was reluctant to do so, saying it violated the company's privacy. Those were the only dates she would give me. So it looks like there definitely are still shares hitting the market. The selling appears relentless.

This o/s is much more than I was expecting, and I don't know why or how they are going to buyback over 10 million shares, so I've decided to take a wait and see approach.

[shmolton]

It is Compushare linus. I left a message, no return call yet.

[shmolton]

I just called Ameritrade and they said it is interwest too. I'm calling them again now.

[linuspop]

shmolton, IEAM's transfer agent could still be Computershare....found this from a 2006 filing:

"Our transfer agent is Computershare Limited, located at 350 Indiana Street, Suite 800, Golden, Colorado 80401, telephone number [phone]."

http://sec.edgar-online.com/2006/05/31/0001354717-06-000024/Section31.asp

[shmolton]

Does anybody know who IEAM's transfer agent is? Pinksheets shows it as Interwest, but they say they don't have IEAM in their system.

[shmolton]

I was told the same. Said they can't share the convertible info or the o/s info unless they do it publicly. They said Pike and Capital both intend to be silent owners, they meet with John regularly and are banking on his ability to turn the company around.

[linuspop]

I just saw the IEAM ticker go by on CNBC (for the first time). Exposure is good...

[cl001]

Didn't ask. EOM

[shmolton]

Were they able to tell you how many they thought are left or the current o/s?

[cl001]

Called the IR. They knew the Capital Guardian guys and expect them to be a new silent owner. They believe Capital Guardian bought shares from the open market.
IEAM is still working on the press release about the convertible bond excise, we should see it in a few weeks I was told.

[shmolton]

Somebody's on a shopping spree today, strong bid movin up and taking out large offers, nice to see.

[shmolton]

Nice to see another 5%+ owner. Capital Guardian Trust now owns 2,527,190 shares or 17.2% of the 14,697,754 shares of Common Stock believed to be outstanding, but it looks like the o/s has increased if I'm not mistaken. Between them and Pike they own almost 50% of the company now. That sure seems like a big stake. I wonder if somebody is taking this private?

[retired_by_31]

New SEC filing

http://www.sec.gov/Archives/edgar/data/314965/000094930807000217/edgieam.txt

[linuspop]

and then another block of 32K at $4.97...

[shmolton]

I just see 100 shares at 5.27

[linuspop]

A/H block trade at $5.27