SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



{x} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004



OR



{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934



FOR THE TRANSITION PERIOD FROM ________ TO __________



REGISTRATION NUMBER 333-101960



IDEAL ACCENTS, INC.

(Exact name of registrant as specified in its charter)



Florida                                                              65-0888146

(State or other jurisdiction of                                (I.R.S. Employer

incorporation or organization)                              Identification No.)



50 Tiffield Rd., Unit 1, Scarborough, Ontario M1V 5B7

(Address of principal executive offices) (Zip Code)



Registrant's telephone number, including area code: (416) 435-6867



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act 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 [X]

NO [ ]



State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:



Class

Outstanding As of September 30, 2004

Common Stock $ .001 par value

15,563,252



.





PART I: FINANCIAL INFORMATION





IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida



|FINANCIAL REPORTS 
|------------------
|AT                
|SEPTEMBER 30, 2004

.



|IDEAL ACCENTS, INC. AND SUBSIDIARIES
(A FLORIDA CORPORATION)
Miami, Florida


TABLE OF CONTENTS


Consolidated Balance Sheets at September 30, 2004 (Unaudited)
and December 31, 2003
1

Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the
Nine Months Ended September 30, 2004 and 2003 (Unaudited) and for the Year
Ended December 31, 2003
2

Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Three and Nine Months Ended September 30, 2004 and 2003 (Unaudited)
3

Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2004 and 2003 (Unaudited)
4

Notes to Consolidated Financial Statements
5-8
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|IDEAL ACCENTS INC. AND SUBSIDIARIES                          |               |  |              
|------------------------------------------------------------ | ------------- |  | -------------
|(A FLORIDA CORPORATION)                                      |               |  |              
|Miami, Florida                                               |               |  |              
|                                                             |               |  |              
|CONSOLIDATED BALANCE SHEETS                                  |               |  |              
|                                                             |               |  |              
|                                                             | (Unaudited)   |  |              
|                                                             | September 30, |  | December 31, 
|                                                             | 2004          |  | 2003         
|                                                             |               |  |              
|ASSETS                                                       |               |  |              
|                                                             |               |  |              
|Current Assets                                               |               |  |              
|Cash and Cash Equivalents                                    | $      13,488 |  | $      11,016
|Accounts Receivable - Net of Allowance for Doubtful Accounts | 56,300        |  | 662,328      
|Inventory - Net of Valuation Allowance                       | 103,400       |  | 437,674      
|Prepaid Expenses and Other Current Assets                    | 2,175         |  | 16,338       
|                                                             |               |  |              
|Total Current Assets                                         | 175,363       |  | 1,127,356    
|                                                             |               |  |              
|Property and Equipment - Net of Accumulated Depreciation     | 96,750        |  | 326,646      
|                                                             |               |  |              
|Intangible Assets - Net of Accumulated Amortization          |              |  | 72,797       
|                                                             |               |  |              
|Other Assets                                                 | 22,050        |  | 19,559       
|                                                             |               |  |              
|Total Assets                                                 | $    294,163  |  | $ 1,546,358  
|                                                             |               |  |              
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)               |               |  |              
|                                                             |               |  |              
|Current Liabilities                                          |               |  |              
|Accounts Payable                                             | $ 1,691,982   |  | $ 1,843,344  
|Lines of Credit                                              | 129,814       |  | 158,404      
|Notes and Capital Leases Payable - Due Within One Year       | 356,945       |  | 656,444      
|Accrued Payroll                                              | 83,395        |  | 400,789      
|Due to Related Party - Due Within One Year                   | 132,058       |  | 104,475      
|Accrued Liabilities and Other Current Liabilities            | 187,293       |  | 79,317       
|                                                             |               |  |              
|Total Current Liabilities                                    | 2,581,487     |  | 3,242,773    
|                                                             |               |  |              
|Due to Related Party - Due After One Year                    | 1,042,695     |  | 1,196,312    
|Notes and Capital Leases Payable - Due After One Year        |              |  | 213,018      
|Subscriptions Payable                                        |              |  | 56,112       
|Notes Payable - Officers/Stockholders                        | 70,831        |  | 29,200       
|                                                             |               |  |              
|Total Liabilities                                            | 3,695,013     |  | 4,737,415    
|                                                             |               |  |              
|Stockholders' Equity (Deficit)                               |               |  |              
|Common Stock                                                 | 15,563        |  | 9,969        
|Additional Paid-In Capital                                   | 1,390,144     |  | 59,413       
|Retained Earnings (Deficit)                                  | (4,641,667)   |  | (3,099,561)  
|Accumulated Comprehensive Income (Loss)                      | (164,890)     |  | (160,878)    
|                                                             |               |  |              
|Total Stockholders' Equity (Deficit)                         | (3,400,850)   |  | (3,191,057)  
|                                                             |               |  |              
|Total Liabilities and Stockholders' Equity (Deficit)         | $    294,163  |  | $ 1,546,358  

The accompanying notes are an integral part of these financial statements.



- # -



|IDEAL ACCENTS INC. AND SUBSIDIARIES                                              |            |  |           |  |             |  |              |  |               |  |           |  |              
|-------------------------------------------------------------------------------- | ---------- |  | --------- |  | ----------- |  | ------------ |  | ------------- |  | --------- |  | -------------
|(A FLORIDA CORPORATION)                                                          |            |  |           |  |             |  |              |  |               |  |           |  |              
|Miami, Florida                                                                   |            |  |           |  |             |  |              |  |               |  |           |  |              
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED) |            |  |           |  |             | 
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|                                                                                 |            |  |           |  |             |  |              |  | Accumulated   |  |           |  | Total        
|                                                                                 | Number     |  |           |  | Additional  |  | Retained     |  | Comprehensive |  |           |  | Stockholders'
|                                                                                 | of         |  | Common    |  | Paid-In     |  | Earnings     |  | Income        |  | Treasury  |  | Equity       
|                                                                                 | Shares     |  | Stock     |  | Capital     |  | (Deficit)    |  | (Loss)        |  | Stock     |  | (Deficit)    
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Balance - January 1, 2003                                                        | 9,968,255  |  | $   9,969 |  | $   59,493  |  | $(1,866,945) |  | $     (4,973) |  | $(1,000)  |  | $(1,803,456) 
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Net Income (Loss) for the Period Ended                                           |           |  |          |  |            |  | (427,952)    |  |              |  |          |  | (427,952)    
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |            |  |             |  | (99,099)      |  |          |  | (99,099)     
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Balance - September 30, 2003 (Unaudited)                                         | 9,968,255  |  | 9,969     |  | 59,493      |  | (2,294,897)  |  | (104,072)     |  | (1,000)   |  | (2,330,507)  
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Discontinued Operations                                                          |           |  |          |  | (80)        |  |             |  |              |  | 1,000     |  | 920          
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Net Income (Loss) for the Period Ended                                           |           |  |          |  |            |  | (804,664)    |  |              |  |          |  | (804,664)    
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |            |  |             |  | (56,806)      |  |          |  | (56,806)     
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Balance - December 31, 2003                                                      | 9,968,255  |  | 9,969     |  | 59,413      |  | (3,099,561)  |  | (160,878)     |  |          |  | (3,191,057)  
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Common Stock Issued for Cash                                                     | 50,000     |  | 50        |  | 39,950      |  |             |  |              |  |          |  | 40,000       
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Common Stock Issued in Exchange for Services
Rendered                            | 626,666    |  | 626       |  | 82,633      |  |             |  |              |  |          |  | 83,259       
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Common Stock Issued in Exchange of Debt                                          | 3,834,783  |  | 3,835     |  | 1,116,835   |  |             |  |              |  |          |  | 1,120,670    
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Common Stock Issued in Exchange for
Stock Subscriptions                          | 145,040    |  | 145       |  | 92,251      |  |             |  |              |  |          |  | 92,396       
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Common Stock Issued in Exchange for
Exchangeable Stock                           | 938,508    |  | 938       |  | (938)       |  |             |  |              |  |          |  |             
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Net Income (Loss) for the Period Ended                                           |           |  |          |  |            |  | (1,542,106)  |  |              |  |          |  | (1,542,106)  
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |            |  |             |  | (4,012)       |  |          |  | (4,012)      
|                                                                                 |            |  |           |  |             |  |              |  |               |  |           |  |              
|Balance - September 30, 2004                                                     | 15,563,252 |  | $ 15,563  |  | $ 1,390,144 |  | $(4,641,667) |  | $(164,890)    |  | $        |  | $(3,400,850) 

The accompanying notes are an integral part of these financial statements.



- # -



|IDEAL ACCENTS INC. AND SUBSIDIARIES                                               |                    |  |                   |  |                  |  |                 
|--------------------------------------------------------------------------------- | ------------------ |  | ----------------- |  | ---------------- |  | ----------------
|(A FLORIDA CORPORATION)                                                           |                    |  |                   |  |                  |  |                 
|Miami, Florida                                                                    |                    |  |                   |  |                  |  |                 
|                                                                                  |                    |  |                   |  |                  |  |                 
|                                                                                  |                    |  |                   |  |                  |  |                 
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
|                                                                                  |                    |  |                   |  |                  |  |                 
|                                                                                  | Three Months Ended |  | Nine Months Ended
|                                                                                  | September 30,      |  | September 30,    
|                                                                                  | 2004               |  | 2003              |  | 2004             |  | 2003            
|                                                                                  |                    |  |                   |  |                  |  |                 
|Sales                                                                             | $ 1,451,355        |  | $ 2,124,710       |  | $ 4,452,835      |  | $ 6,021,094     
|                                                                                  |                    |  |                   |  |                  |  |                 
|Cost of Goods Sold                                                                | 1,374,138          |  | 1,426,580         |  | 3,694,658        |  | 4,142,434       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Gross Profit                                                                      | 77,217             |  | 698,130           |  | 758,177          |  | 1,878,660       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Operating Expenses                                                                |                    |  |                   |  |                  |  |                 
|Advertising and Promotion                                                         | 8,636              |  | 13,665            |  | 60,394           |  | 41,863          
|Asset Impairment Writedown                                                        | 213,218            |  |                  |  | 213,218          |  |                
|Selling, General and Administrative                                               | 733,509            |  | 669,892           |  | 1,726,560        |  | 1,872,908       
|Depreciation and Amortization                                                     | 41,261             |  | 40,862            |  | 124,217          |  | 138,608         
|Impairment of Goodwill                                                            | 21,013             |  |                  |  | 21,013           |  |                
|Interest Expense                                                                  | 46,380             |  | 119,855           |  | 154,881          |  | 250,333         
|                                                                                  |                    |  |                   |  |                  |  |                 
|Total Operating Expenses                                                          | 1,064,017          |  | 844,274           |  | 2,300,283        |  | 2,303,712       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Income (Loss) From Operations
Before Provision for Taxes                          | (986,800)          |  | (146,144)         |  | (1,542,106)      |  | (425,052)       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Provision for Taxes                                                               |                   |  | 2,900             |  |                 |  | 2,900           
|                                                                                  |                    |  |                   |  |                  |  |                 
|Net Income (Loss)                                                                 | (986,800)          |  | (149,044)         |  | (1,542,106)      |  | (427,952)       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Comprehensive Income (Loss)                                                       |                    |  |                   |  |                  |  |                 
|Foreign Currency Translation                                                      | (27,561)           |  | (80,076)          |  | (4,012)          |  | (179,175)       
|                                                                                  |                    |  |                   |  |                  |  |                 
|Comprehensive Income (Loss)                                                       | $(1,014,361)       |  | $   (229,120)     |  | $(1,546,118)     |  | $   (607,127)   
|                                                                                  |                    |  |                   |  |                  |  |                 
|Income (Loss) Per Common Share -                                                  |                    |  |                   |  |                  |  |                 
|Basic                                                                             | $         (0.10)   |  | $         (0.03)  |  | $         (0.19) |  | $         (0.08)
|Diluted                                                                           | $         (0.10)   |  | $         (0.03)  |  | $         (0.19) |  | $         (0.08)
|                                                                                  |                    |  |                   |  |                  |  |                 
|Weighted Average Number of                                                        |                    |  |                   |  |                  |  |                 
|Common Shares Outstanding -                                                       |                    |  |                   |  |                  |  |                 
|Basic                                                                             | 10,598,481         |  | 5,218,774         |  | 7,963,416        |  | 5,218,774       
|Diluted                                                                           | 10,598,481         |  | 5,218,774         |  | 7,963,416        |  | 5,218,774       

The accompanying notes are an integral part of these financial statements.



- # -



|IDEAL ACCENTS INC. AND SUBSIDIARIES                                |                 |  |            
|------------------------------------------------------------------ | --------------- |  | -----------
|(A FLORIDA CORPORATION)                                            |                 |  |            
|Miami, Florida                                                     |                 |  |            
|                                                                   |                 |  |            
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                  |                 |  |            
|                                                                   |                 |  |            
|For the Nine Months Ended September 30,                            | 2004            |  | 2003       
|                                                                   |                 |  |            
|Cash Flows from Operating Activities                               |                 |  |            
|Net Income (Loss)                                                  | $(1,542,106)    |  | $(427,952) 
|Non-Cash Adjustments                                               |                 |  |            
|Asset Impairment Writedown                                         | 213,218         |  |           
|Bad Debt                                                           | 415,655         |  |           
|Depreciation and Amortization                                      | 124,217         |  | 138,608    
|Common Stock Issued in Exchange for Services Rendered              | 83,259          |  |           
|Inventory Impairment Writedown                                     | 288,183         |  |           
|Impairment of Goodwill                                             | 21,013          |  |           
|Changes in Assets and Liabilities                                  |                 |  |            
|Accounts Receivable                                                | 190,373         |  | (109,181)  
|Inventory                                                          | 46,091          |  | (91,046)   
|Prepaid Expenses and Other Current Assets                          | (4,287)         |  | 42,713     
|Other Assets                                                       | (21,389)        |  | (90,652)   
|Accounts Payable                                                   | (151,362)       |  | 95,371     
|Accrued Payroll                                                    | 8,706           |  | 4,665      
|Accrued Liabilities and Other Current Liabilities                  | 107,976         |  | 84,113     
|                                                                   |                 |  |            
|Net Cash Flows from Operating Activities                           | (220,453)       |  | (353,361)  
|                                                                   |                 |  |            
|Cash Flows from Investing Activities                               |                 |  |            
|Purchase of Property and Equipment                                 | (18,407)        |  | (2,404)    
|                                                                   |                 |  |            
|Net Cash Flows from Investing Activities                           | (18,407)        |  | (2,404)    
|                                                                   |                 |  |            
|Cash Flows from Financing Activities                               |                 |  |            
|Repayment of Lines of Credit                                       | (28,590)        |  | (24,546)   
|Repayment of Notes and Capital Leases Payable                      | (117,947)       |  | 284,758    
|Proceeds from (Repayment of) Notes Payable - Officers/Stockholders | 41,631          |  | (79,592)   
|Proceeds from Issuance of Stock Subscriptions                      | 36,284          |  |           
|Proceeds from Due to Related Party                                 | 273,966         |  | 360,737    
|Proceeds from Issuance of Common Stock                             | 40,000          |  |           
|                                                                   |                 |  |            
|Net Cash Flows from Financing Activities                           | 245,344         |  | 541,357    
|                                                                   |                 |  |            
|Effect of Exchange Rate Changes on Cash and Cash Equivalents       | (4,012)         |  | (184,919)  
|                                                                   |                 |  |            
|Net Change in Cash and Cash Equivalents                            | 2,472           |  | 673        
|                                                                   |                 |  |            
|Cash and Cash Equivalents - Beginning of Period                    | 11,016          |  | 3,592      
|                                                                   |                 |  |            
|Cash and Cash Equivalents - End of Period                          | $      13,488   |  | $     4,265
|                                                                   |                 |  |            
|NON-CASH INVESTING AND FINANCING TRANSACTIONS                      |                 | 
|                                                                   |                 | 
|Common Stock Issued in Exchange for Services Rendered              | 82,633          |  |           
|Common Stock Issued in Exchange of Debt                            | 1,120,670       |  |           
|Common Stock Issued in Exchange of Stock Subscriptions             | 92,396          |  |           
|Common Stock Issued in Exchange for Exchangeable Shares            | 938             |  |           
|                                                                   |                 | 
|SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR INTEREST AND TAXES        |                 | 
|                                                                   |                 |  |            
|Interest                                                           | $    154,881    |  | $ 217,710  
|Taxes Paid                                                         | $              |  | $     2,900

The accompanying notes are an integral part of these financial statements.



- # -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note A -

Basis of Presentation

The condensed consolidated financial statements of Ideal Accents, Inc. and Subsidiaries (the Company) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC).  Certain information and footnote disclosures normally included in financial statements prepared in conjunction with accounting principles generally accepted in the United States of America 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 condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and the notes thereto, included in the Companys Form 10K Annual Report, and other filings with the SEC.



The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period of or for the fiscal year taken as a whole.  Factors that affect the comparability of financial data from year to year and for comparable interim periods include non-recurring expenses associated with the Companys registrations with the SEC and the seasonal fluctuations of the business. Certain financial information that is not required for interim financial reporting purposes has been omitted.



Note B -

Foreign Currency Translation

The Companys foreign operations in Toronto Ontario, Canada, are measured using the local currency as the functional currency.  Assets and liabilities are translated at exchange rates as of the balance sheet date.  Revenues, expenses and cash flows are translated at weighted average rates of exchange in effect during the year.  The resulting cumulative translation adjustments have been recorded as a separate component of stockholders equity and comprehensive income.  Foreign currency transaction gains and losses are included in net income.  Foreign currency cash flows are translated at the weighted average rate of exchange in effect during the period due to the minimal fluctuation in the currency exchange rates during the period.  Management believes that substantially the same results would be derived if foreign cash flows were translated at the rates in effect at the time of the cash flows.



Note C -

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform with the current year presentation







IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note D -

Common Stock Transactions

During the quarter ended March 31, 2004, the Company issued 656,510 of common stock to officers of the Company for services rendered during 2004 in the amount of $326,100.



During the quarter ended March 31, 2004, the Company exchanged 938,508 of common stock to holders of exchangeable shares of Ideal Accents (Nova Scotia) Company, a Nova Scotia corporation and Ideal Accents Holding, Inc., an Ontario corporation.  The Company acquired all the common stock of the two Canadian companies through the issuance of common stock and exchangeable shares during December 2001.  The exchangeable shares can converted into common stock of Ideal for a total of 5,250,958 common shares.



On April 15, 2004, the Company issued 145,040 of common stock to holders of outstanding stock subscriptions in the amount of $92,396.  The terms of the stock subscriptions were based on issuance of common stock at the price of the average of the first twenty day trading closing prices of the Corporations common shares on the OTC-BB less a 20% discount, payable within ten days following the first twenty days of trading of the Corporations common stock on the OTC-BB.



The Company issued 1,578,273 of common stock in exchange of debt in the amount of $394,570 on June 30, 2004.  Also on June 30, 2004, the Company issued 1,600,000 of the common stock to AVG (OEAM) Inc. in exchange of debt in the amount of $400,000.  Several principal shareholders of the Company are also principal shareholders of AVG (OEAM) Inc.



Note E -

Impairment of Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2004 and 2003 are as follows:



|September 30,                |  | 2004       | 2003    
|---------------------------- |  | ---------- | --------
|                             |  |            |         
|Balance at Beginning of Year |  | $ 21,013   | $ 53,953
|Impairment of Goodwill       |  | (21,013)   |        
|                             |  |            |         
|Balance at End of Year       |  | $         | $ 53,953



Goodwill is assigned to specific reporting units and is reviewed for possible impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting units carrying amount is greater than its fair value.  Due to the Companys filing of Chapter 11 bankruptcy on October 13, 2004 (Note H), the remaining balance of goodwill was impaired at September 30, 2004.







IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note F -

Asset Impairment Writedown

Due to the Companys filing of Chapter 11 bankruptcy (Note H), the following assets were written down to fair value based on prices for similar assets:



|September 30,                                                     | 2004      | 2003    
|----------------------------------------------------------------- | --------- | --------
|                                                                  |           |         
|Inventory                                                         | $ 288,183 | $      
|Fixed Assets                                                      | 154,592   |        
|Intangible Assets                                                 | 21,278    |        
|Other Assets                                                      | 37,348    |        
|                                                                  | $ 501,401 | $      
|Less: Inventory Writedown (Included in Cost of Goods Sold)        | (288,183) |        
|                                                                  |           |         
|Total Asset Impairment Writedown (Included in Operating Expenses) | $ 213,218 | $      



Note G -

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Company as a going concern.  However, the Company has sustained substantial operating losses in recent years.  In addition, the Company has used substantial amounts of working capital in its operations.  Further, at September 30, 2004, current liabilities exceed current assets by $2,406,124, and total liabilities exceed total assets by $3,400,850. On October 13, 2004, the Company filed for Bankruptcy protection (Note H).



In view of these matters, the Company has recorded impairment losses on substantially all of its assets as of September 30, 2004 to reflect realizable value upon liquidation.



Note H -

Subsequent Event

On October 13, 2004, the Company,filed a voluntary petition under chapter 11 of title 11 of the United States Code (the Bankruptcy Code).  The Company has had continued shortfalls in revenues cash flows from operating and has been unable to obtain financing.  The outstanding debt owed to Citizens Bank was purchased by Ideal Auto Restyling.  The Company took action to alleviate that debt by voluntarily surrendering assets of two U.S. Subsidiaries to Ideal Auto Restyling, in full satisfaction of amounts owing by the two U.S. Subsidiaries and for a release and discharge of Ideal Auto Restylings liens on assets of the two U.S. Subsidiaries.



In addition, on October 8, 2004, the Company ceased all U.S. operations.  Since the voluntary surrender of the U.S. Subsidiaries assets, the Canadian Subsidiaries continue to operate at a loss but the core business operations, Somani Holding, Inc., remain a viable enterprise.  Due to the apparent insolvency of the Debtor, the possible de-listing of the Companys stock from the OTC Bulletin Board, and an attempt to reduce secured loan obligations, the Company was concerned that, among other things, Canadian insolvency laws might require commencement of a Canadian insolvency proceeding or that Canadian creditors might commence involuntary proceedings.  For these reasons, among others, the Company commenced the Chapter 11 proceeding in order to preserve any remaining value and to prevent a race by creditors to foreclose on such remaining property and to investigate whether potential causes of action exist as to certain pre-petition transfers.







MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2004 AND 2003



Forward-Looking Statements.The statements contained in this report on Form 10Q which are not historical facts, including (without limitation) in particular, statements made in this Item, may contain forward-looking statements that are subject to important factors that could cause actual results to differ materially from those in the forward-looking statement, including (without limitation) product demand; the effect of economic conditions; the impact of competitive services, products, pricing; product development; parts supply restraints or difficulties; industry regulation; the continued availability of capital resources and financing and other risks set forth or incorporated herein and in Ideal's Securities and Exchange Commission filings. Ideal does not undertake to update any forward-looking statement that may be made from time to time by or on its behalf.

Introduction.  Ideal sells and installs a wide range of automotive aftermarket accessories primarily to new vehicle dealers in Toronto (Scarborough), Ontario, Canada.

Ideal generates revenue by the sale and installation of the following accessories: Power Moonroofs, Manual & Topsliding Sunroofs, Carriage Roofs, Custom Tops, Leather Seat Covers and Trim, Spoilers, Wood Dashes, Ground Effects, Truck Accessories, Mobile Electronics, Entertainment Systems, Navigation Systems, Telematics, and other Styling and Functional Accessories.

The following discussion and analysis of Ideal's financial condition and results of operations should be read in conjunction with the financial statements appearing in this Form 10Q.

Events Leading to Chapter 11 Filing.On October 13, 2004, Ideal filed a voluntary petition under chapter 11 of title 11 of the United States Code with the U.S. Bankruptcy Court of the Southern District of New York.  The assigned case number is 04-16632.



During the previous two years, Ideal and its Subsidiaries operated at a significant loss.  On a consolidated basis, in 2002, Ideal incurred losses of $1,235,251 on sales of $8,773,668; and in 2003, Ideal incurred losses of $1,388,521 on sales of $7,573,344.  Ideal also incurred one-time costs associated with the registration of its shares and its commencement of trading on the OTC Bulletin Board.  Ideals objective for 2004 was to achieve consolidated annualized sales of up to $12,500,000 and a positive bottom line through a growth strategy that included the acquisition of owner-operated installation shops.



Ideal was unable to achieve its intended results due in part to a slowdown in the automotive industry over the last eighteen months.  This industry-wide slowdown caused Ideal to revise its projected sales goals, acquisition strategy, and projected earnings.  Accordingly, Ideals plan to meet operating and financing needs for July 2004  December 2004 was to seek alternate sources of equity and debt financing to support operations.  Ideals principal stockholders had extended short-term loans to certain of the Subsidiaries.  As an additional source of short-term funding, the Subsidiaries sold certain accounts receivable at a discount from their face value to a receivables factoring company.  Due to continued shortfalls in revenue and an inability to obtain financing, beginning in the summer of 2004, Ideal and its Subsidiaries began experiencing financial difficulties.  Cost cutting measures were implemented, including consolidating our Troy, Michigan facility into our Ferndale, Michigan facility.  On September 30, 2004, Ideal had only two operating facilities remaining: one in Ferndale, Michigan; the other in Scarborough, Ontario.



From June 30, 2004 to September 30, 2004, Ideals assets declined from $1,313,210 to $294,163 primarily due to significant declines in accounts receivable and inventory.  The decline in accounts receivable was attributed both to reductions in Ideals business and significantly greater factoring of receivables necessitated by its liquidity needs.  The decline in inventory was attributed to Ideals inability to maintain substantial inventories with its financial resources.  The September 30, 2004 balance sheet also reflected negative working capital of $2,406,000 and total stockholders deficit in excess of $3,400,000.  The latter amount included related-party indebtedness of approximately $1,000,000, the major portion of this indebtedness owing to AVG (OEAM), Inc.



In September 2004, two of Ideals U.S. Subsidiaries, Ideal Accents Inc. (Ferndale) and T.O.E., Inc., both operating out of the Ferndale, Michigan facility, were notified by Citizens Bank that they were in default of a certain indebtedness that had an outstanding principal balance of approximately $230,000.00.  In response, Ideal decided to surrender specified assets at the Ferndale facility in exchange for a release and discharge of Citizens Banks liens on assets of the two U.S. Subsidiaries.  These assets were surrendered on October 8, 2004.  The Ferndale operating facility was shut down shortly thereafter.  Currently, Ideal has only one operating facility remaining in Scarborough, Ontario.



Due to the apparent insolvency of Ideal, the possible de-listing of Ideals stock from the OTC Bulletin Board, and an attempt to reduce secured loan obligations, Ideal was concerned that, among other things, Canadian insolvency laws might require commencement of a Canadian insolvency proceeding or that Canadian creditors might commence involuntary proceedings.  For these reasons, among others, Ideal commenced this Chapter 11 proceeding in order to preserve the estates value and to prevent a race by creditors to foreclose on estate property.



Chapter 11 Progress.  We expect to file the Disclosure Statement and the Draft Plan to the court by November 30, 2004.  The Initial Case Conference and the 341 Meeting of Creditors have already been scheduled.  Barring any significant objections, we expect approval on the Disclosure Statement and confirmation on the Draft Plan by March 31, 2005.



Recent Accounting Pronouncements.  There are no recently issued accounting standards that would have a material impact on the financial statements.

Plan of Operations for Next 12 Months.  An important objective of our Plan is to emerge from Chapter 11 with a fiscally sound company.  A key element in this Plan supporting this objective will be to negotiate a merger with a Merger-Partner that would add significant value to Ideals top and bottom lines.

Risk Factors



Going Concern Qualification.  Filing a Chapter 11 Plan does not in any way assure Ideals survival.  It simply provides Ideal a chance to reorganize itself so as to give it a chance to continue as a going concern.  However, Ideals emergence from Chapter 11 itself is contingent upon a number of factors.  Two of these are discussed below.



Securing DIP Loan.  Ideal will incur administrative expenses while in the Chapter 11 process.  Its ability to pay for these expenses will depend on securing a Debtor-In-Possession (DIP) loan.  To date, it has not secured such a loan.  If Ideal is not able to secure such a loan, it may never emerge from the bankruptcy proceeding and our shareholders will lose their entire investment.



Securing Merger-Partner.To place Ideal on a fiscally sound footing when it emerges from Chapter 11 will require that it successfully negotiate a merger with a Merger-Partner that is financially sound itself.  If Ideal does not succeed in negotiating such a merger, the public company maintenance costs will be too high for its remaining operating entity in Scarborough, Ontario to sustain and, therefore, will have no choice but to file a straight Chapter 7 liquidation plan, in which event our shareholders will lose their entire investment.









PART II: OTHER INFORMATION



ITEM 1:

LEGAL PROCEEDINGS:



At this time there are several creditor claims related proceedings in which Ideal, or one of Ideal's subsidiaries are a party.





ITEM 2:

CHANGES IN SECURITIES:



During the period ended September 30, 2004, the Company issued the following shares in its common stock:

•

195,040 common shares to private placement subscribers raising an aggregate amount of $134,276

•

100,000 common shares to a services provider for services valued at $30,593

•

656,510 common shares to officers of the Company for services rendered during 2003 valued at $326,100

•

3,178,273 common shares to various note holders for reducing the Companys debt obligation to them by $794,568

•

200,000 common shares to a services provider for services valued at $20,000

•

160,000 common shares to a services provider for services valued at $16,000

•

50,000 common shares to a services provider for services valued at $5,000

•

16,666 common shares to a services provider for services valued at $1,666

•

100,000 common shares to a services provider for services valued at $10,000



Additionally, during the period ended March 31, 2004, the Company exchanged 938,508 common shares for exchangeable shares held by shareholders of Ideal Accents Holdings, Inc., a wholly owned subsidiary of the Company. These exchangeable shares carry voting rights of one vote per share on all matters coming before the shareholders of Ideal and are exchangeable at any time for common shares of Ideal.  As of March 31, 2004, the shareholders of Ideal Accents Holdings, Inc. have a total of 4,312,450 exchangeable shares that have not been exchanged for common shares in Ideal.



As of September 30, 2004, Ideal has 15,563,252 shares of its common stock outstanding.



ITEM 3:

DEFAULTS UPON SENIOR SECURITIES:



None.



ITEM 4:

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:



None.



ITEM 5:

OTHER INFORMATION:



None.



ITEM 6:

EXHIBITS & REPORTS:





Exhibits



(a)

99.1 Certification of Chief Executive Officer.

99.2 Certification of Chief Financial Officer.

99.3 Certificate of Chief Executive Officer and Chief Financial Officer.







SIGNATURE



Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.



Dated: November 19, 2004

/s/  Karim Suleman

Karim  Suleman

Executive Vice President