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 JUNE 30, 2005



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) 904-1677



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 June 30, 2005

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

JUNE 30, 2005



.



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


TABLE OF CONTENTS


Independent Accountants Report on Review of Financial Information
1

Consolidated Balance Sheets at June 30, 2005 (Unaudited)
and December 31, 2004
2

Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the
Six Months Ended June 30, 2005 and 2004 (Unaudited)
3

Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Three and Six Months Ended June 30, 2005 and 2004 (Unaudited)
4

Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2005 and 2004 (Unaudited)
5

Notes to Consolidated Financial Statements
6-8

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

Independent Accountants Report on Consolidated Supplementary Information
i

Consolidated Supplementary Schedules of Cost of Goods Sold and
General and Administrative Expenses for the Six Months Ended
June 30, 2005 and 2004 (Unaudited)
ii
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





INDEPENDENT AUDITORS REPORT ON REVIEW OF FINANCIAL INFORMATION





Ideal Accents, Inc. and Subsidiaries

(A Florida Corporation)

Miami, Florida



We have reviewed the accompanying consolidated balance sheet of Ideal Accents, Inc. and Subsidiaries (A Florida Corporation) as of June 30, 2005, the related consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2005 and 2004, consolidated statements of changes in stockholders equity (deficit), and cash flows for the six months ended June 30, 2005 and 2004.  All information included in these financial statements is the responsibility of the management of Ideal Accents, Inc. and Subsidiaries.



We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants.  A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.



Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.



We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet (presented herein) of Ideal Accents, Inc. and Subsidiaries as of December 31, 2004, and the related consolidated statements of changes in stockholders equity (deficit), operations, and cash flows for the year then ended (not presented herein); and in our report, dated February 23, 2005, we expressed an unqualified opinion on those consolidated financial statements.  In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2004 is fairly stated, in all material respects.  No auditing procedures have been performed subsequent to the date of our report.



The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note E to the financial statements, the Company has  incurred substantial net losses for each of the past two years.  At June 30, 2005, current liabilities exceed current assets by $3,856,578 and total liabilities exceed total assets by $3,838,964.  As discussed in Note A, the Company has filed a voluntary petition under chapter 11 of title 11 of the United States Code (the Bankruptcy Code).  These conditions raise substantial doubt about its ability to continue as a going concern. The financial statements include adjustments as discussed in Note N based on managements estimate of the outcome of the voluntary petition with the Bankruptcy Code.









Rotenberg & Co., LLP

Rochester, New York

August 12,, 2005





|IDEAL ACCENTS INC. AND SUBSIDIARIES                          |                |  |                
|------------------------------------------------------------ | -------------- |  | ---------------
|(A FLORIDA CORPORATION)                                      |                |  |                
|Miami, Florida                                               |                |  |                
|                                                             |                |  |                
|CONSOLIDATED BALANCE SHEETS                                  |                |  |                
|                                                             |                |  |                
|                                                             | (Unaudited)    |  |                
|                                                             | June 30,       |  | December 31,   
|                                                             | 2005           |  | 2004           
|                                                             |                |  |                
|ASSETS                                                       |                |  |                
|                                                             |                |  |                
|Current Assets                                               |                |  |                
|Cash and Cash Equivalents                                    | $        3,721 |  | $             
|Accounts Receivable - Net of Allowance for Doubtful Accounts | 8,539          |  | 48,526         
|Inventory - Net of Valuation Allowance                       | 25,367         |  | 22,885         
|Prepaid Expenses and Other Current Assets                    | 7,772          |  | 7,927          
|                                                             |                |  |                
|Total Current Assets                                         | 45,399         |  | 79,338         
|                                                             |                |  |                
|Property and Equipment - Net of Accumulated Depreciation     | 8,984          |  | 12,273         
|                                                             |                |  |                
|Other Assets                                                 | 3,926          |  | 3,990          
|                                                             |                |  |                
|Total Assets                                                 | $      58,309  |  | $      95,601  
|                                                             |                |  |                
|LIABILITIES AND STOCKHOLDERS' DEFICIT                        |                |  |                
|                                                             |                |  |                
|Current Liabilities                                          |                |  |                
|Accounts Payable - Pre Petition                              | $ 1,726,000    |  | $ 1,726,000    
|Accounts Payable - Post Petition                             | 492,642        |  | 451,975        
|Lines of Credit                                              | 101,630        |  | 128,549        
|Notes and Capital Leases Payable - Due Within One Year       | 104,425        |  | 104,425        
|Accrued Payroll                                              | 52,797         |  | 49,917         
|Due to Related Party - Due Within One Year                   | 1,322,444      |  | 1,253,184      
|Accrued Liabilities and Other Current Liabilities            | 9,129          |  | 62,630         
|Notes Payable - Officers/Stockholders                        | 88,206         |  | 102,553        
|                                                             |                |  |                
|Total Liabilities                                            | 3,897,273      |  | 3,879,233      
|                                                             |                |  |                
|Stockholders' Deficit                                        |                |  |                
|Common Stock - $.001 Par; 50,000,000 Shares Authorized;      |                |  |                
|15,563,252 Shares Issued and Outstanding                     | 15,563         |  | 15,563         
|Additional Paid-In Capital                                   | 1,390,144      |  | 1,390,144      
|Retained Earnings (Deficit)                                  | (5,012,304)    |  | (4,919,953)    
|Accumulated Comprehensive Income (Loss)                      | (232,367)      |  | (269,386)      
|                                                             |                |  |                
|Total Stockholders' Deficit                                  | (3,838,964)    |  | (3,783,632)    
|                                                             |                |  |                
|Total Liabilities and Stockholders'  Deficit                 | $      58,309  |  | $      95,601  

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   |  |                 
|                                                                                 | Number     |  |           |  | Additional    |  | Retained     |  | Comprehensive |  | Total           
|                                                                                 | of         |  | Common    |  | Paid-In       |  | Earnings     |  | Income        |  | Stockholders   
|                                                                                 | Shares     |  | Stock     |  | Capital       |  | (Deficit)    |  | (Loss)        |  | Equity (Deficit)
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Balance - January 1, 2004                                                        | 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                            | 100,000    |  | 100       |  | 30,493        |  |              |  |               |  | 30,593          
|Common Stock Issued in Exchange for Debt                                         | 3,834,783  |  | 3,835     |  | 1,116,835     |  |              |  |               |  | 1,120,670       
|Common Stock Issued in Exchange for Exchangeable Stock                           | 938,508    |  | 938       |  | (938)         |  |              |  |               |  |                
|Common Stock Issued in Exchange for Stock Subscriptions                          | 145,040    |  | 145       |  | 92,251        |  |              |  |               |  | 92,396          
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Net Loss for the Period Ended                                                    |           |  |          |  |              |  | (555,306)    |  |              |  | (555,306)       
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |              |  |             |  | 23,549        |  | 23,549          
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Balance - June 30, 2004                                                          | 15,036,586 |  | 15,037    |  | 1,338,004     |  | (3,654,867)  |  | (137,329)     |  | (2,439,155)     
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Common Stock Issued in Exchange for Services Rendered                            | 526,666    |  | 526       |  | 52,140        |  |             |  |              |  | 52,666          
|Common Stock Issued in Exchange for Debt                                         |           |  |          |  |              |  |             |  |              |  |                
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Net Loss for the Period Ended                                                    |           |  |          |  |              |  | (1,265,086)  |  |              |  | (1,265,086)     
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |              |  |             |  | (132,057)     |  | (132,057)       
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Balance - December 31, 2004                                                      | 15,563,252 |  | 15,563    |  | 1,390,144     |  | (4,919,953)  |  | (269,386)     |  | (3,783,632)     
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Net Loss for the Period Ended                                                    |           |  |          |  |              |  | (92,351)     |  |              |  | (92,351)        
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Comprehensive Income (Loss) for the Period Ended                                 |           |  |          |  |              |  |             |  | 37,019        |  | 37,019          
|                                                                                 |            |  |           |  |               |  |              |  |               |  |                 
|Balance - June 30, 2005                                                          | 15,563,252 |  | $ 15,563  |  | $ 1,390,144   |  | $(5,012,304) |  | $   (232,367) |  | $(3,838,964)    

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 |  | Six Months Ended
|                                                                                  | June 30,           |  | June 30,        
|                                                                                  |                    |  |                 
|                                                                                  | 2005               |  | 2004            
|Discontinued Operations:                                                          |                    |  |                 
|Sales                                                                             | $      35,324      |  | $ 1,593,052     
|                                                                                  |                    |  |                 
|Cost of Goods Sold                                                                | 29,831             |  | 1,248,084       
|                                                                                  |                    |  |                 
|Gross Profit                                                                      | 5,493              |  | 344,968         
|                                                                                  |                    |  |                 
|Operating Expenses                                                                |                    |  |                 
|Advertising and Promotion                                                         | 1,020              |  | 33,584          
|Selling, General and Administrative                                               | 24,571             |  | 472,582         
|Depreciation and Amortization                                                     | 1,506              |  | 40,987          
|Interest                                                                          | 3,573              |  | 72,627          
|                                                                                  |                    |  |                 
|Total Operating Expenses                                                          | 30,670             |  | 619,780         
|                                                                                  |                    |  |                 
|Loss From Operations Before                 Provision for (Benefit from) Taxes    | (25,177)           |  | (274,812)       
|                                                                                  |                    |  |                 
|Provision for (Benefit from) Taxes                                                | (10)               |  |                
|                                                                                  |                    |  |                 
|Net Loss                                                                          | $     (25,167)     |  | $   (274,812)   
|                                                                                  |                    |  |                 
|Comprehensive Income (Loss)                                                       |                    |  |                 
|Foreign Currency Translation                                                      | 17,713             |  | 9,187           
|                                                                                  |                    |  |                 
|Comprehensive Income (Loss)                                                       | $       (7,454)    |  | $  (265,625)    
|                                                                                  |                    |  |                 
|Income (Loss) Per Common Share -                                                  |                    |  |                 
|Basic                                                                             | $         (0.00)   |  | $         (0.04)
|Diluted                                                                           | $         (0.00)   |  | $         (0.04)
|                                                                                  |                    |  |                 
|Weighted Average Number of                                                        |                    |  |                 
|Common Shares Outstanding -                                                       |                    |  |                 
|Basic                                                                             | 15,563,252         |  | 7,042,618       
|Diluted                                                                           | 15,563,252         |  | 7,042,618       

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)            |             |  |             
|                                                             | Unaudited  
|Six Months Ended June 30,                                    | 2005        |  | 2004        
|                                                             |             |  |             
|Cash Flows from Operating Activities                         |             |  |             
|Net Loss                                                     | $  (92,351) |  | $(555,306)  
|                                                             |             |  |             
|Non-Cash Adjustments:                                        |             |  |             
|Bad Debt Expense                                             | 6,563       |  |            
|Depreciation and Amortization                                | 3,035       |  | 82,956      
|Common Stock Issued in Exchange for Services Rendered        |            |  | 22,945      
|                                                             |             |  |             
|Changes in Assets and Liabilities                            |             |  |             
|Accounts Receivable                                          | 33,424      |  | 161,478     
|Inventory                                                    | (2,482)     |  | 20,107      
|Prepaid Expenses and Other Current Assets                    | 155         |  | (2,823)     
|Other Assets                                                 | 64          |  | (2,517)     
|Accounts Payable                                             | 40,667      |  | (36,755)    
|Accrued Payroll                                              | 2,880       |  | 19,908      
|Accrued Liabilities and Other Current Liabilities            | (53,247)    |  | (37,903)    
|                                                             |             |  |             
|Net Cash Flows from Operating Activities                     | (61,292)    |  | (327,910)   
|                                                             |             |  |             
|Cash Flows from Investing Activities                         |             |  |             
|Purchases of Property and Equipment                          |            |  | (16,146)    
|                                                             |             |  |             
|Net Cash Flows from Investing Activities                     |            |  | (16,146)    
|                                                             |             |  |             
|Cash Flows from Financing Activities                         |             |  |             
|Net Repayment of Lines of Credit                             | (26,919)    |  | (20,755)    
|Repayment from Notes and Capital Leases Payable              |            |  | (99,312)    
|Proceeds from Stock Subscriptions                            |            |  | 36,284      
|Net Repayment of Notes Payable - Officers/Stockholders       | (14,347)    |  | 125,100     
|Proceeds from Related Parties                                | 69,260      |  | 241,449     
|Proceeds from Issuance of Common Stock                       |            |  | 40,000      
|                                                             |             |  |             
|Net Cash Flows from Financing Activities                     | 27,994      |  | 322,766     
|                                                             |             |  |             
|Effect of Exchange Rate Changes on Cash and Cash Equivalents | 37,019      |  | 23,549      
|                                                             |             |  |             
|Net Change in Cash and Cash Equivalents                      | 3,721       |  | 2,259       
|                                                             |             |  |             
|Cash and Cash Equivalents - Beginning of Period              |            |  | 11,016      
|                                                             |             |  |             
|Cash and Cash Equivalents - End of Period                    | $     3,721 |  | $   13,275  
|                                                             |             |  |             
|NON-CASH INVESTING AND FINANCING TRANSACTIONS                |             | 
|                                                             |             | 
|Common Stock Issued in Exchange for Services Rendered        |            |  | 30,593      
|Common Stock Issued in Exchange of Debt                      |            |  | 1,120,670   
|Common Stock Issued in Exchange for Exchangeable Shares      |            |  | 938         
|Common Stock Issued in Exchange for Stock Subscriptions      |            |  | 92,396      
|                                                             |             | 
|SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR INTEREST AND TAXES  |             | 
|                                                             |             |  |             
|Interest                                                     | $   6,306   |  | $   84,100  
|Taxes                                                        | $   1,298   |  | $          

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 -

Bankruptcy

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 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 and on April 30, 2005 the Company ceased its Canadian operation.  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.



Share Exchange Agreement and Corporate Reorganization

Ideal Accents, Inc. (Ideal) was incorporated under the laws of the state of Florida on January 21, 1999 as Interactive Technologies, Inc.  On December 11, 2001, the name was changed to Ideal Accents, Inc. The Company was formed for the purpose of acquiring an operating company.



On December 13, 2001, Ideal acquired all of the outstanding shares pursuant to a Share Exchange Agreement and Corporate Reorganization (Merger) of Ideal Accents, Inc. (Ann Arbor) a Michigan corporation, Ideal Accents, Inc. (Taylor) a Michigan corporation, TOE Inc. a Michigan corporation, Ideal Accents, Inc. (Ferndale) as a wholly owned subsidiary, JTM Inc. d/b/a Motor City Sunroof a Michigan corporation.  In a separate but simultaneous transaction on December 13, 2001, Ideal acquired 100% of the outstanding shares of Somani Holdings, Inc. and AutoFun Canada, Inc., both Ontario corporations. Somani Holdings, Inc. AKA Automotive Sunroof Co. supplies and installs auto accessories primarily in Toronto, Ontario, Canada. AutoFun Canada, Inc. provides consulting and administrative services to Auto Accessory Business, also concentrating primarily in Toronto Ontario, Canada.



On December 10, 2001, Ideal incorporated Ideal Accents (Nova Scotia) Company, a Nova Scotia corporation, and on December 11, 2001, incorporated Ideal Accents Holding, Inc., an Ontario corporation.  Ideal acquired all the common stock of the two Canadian companies through the issuance of common stock and exchangeable shares.  The exchangeable shares can be converted into common shares of Ideal for a total of 5,250,958 common shares.  Ideal issued 130,500 of common stock to non-Canadian residents and 5,250,958 to Canadian residents.  These two wholly owned subsidiaries were incorporated to accommodate certain tax considerations related to the acquisition of shares from the Canadian shareholders of the two Canadian companies on December 13, 2001.



Nature of Operations

Prior to the bankruptcy, the Company sold and installed automobile sunroofs and customized accessories primarily for automobile dealers in southeastern Michigan and Ontario, Canada.

- # -





IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note B -

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 C -

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 D -

Common Stock Transactions

During the quarter ended June 30, 2004, the Company issued 100,000 of common stock to officers of the Company for services rendered during 2004 in the amount of $30,493.



During the quarter ended June 30, 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.



- continued -

- # -





IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note D -

Common Stock Transactions - continued



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 -

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate 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 June 30, 2005, current liabilities exceed current assets by $3,856,578, and total liabilities exceed total assets by $3,838,964. On October 13, 2004, the Company filed for Bankruptcy protection (Note A).



In view of these matters, the Company has recorded impairment losses on substantially all of its assets as of December 31, 2004 to reflect realizable value upon liquidation.



Note F -

Discontinued Operations

Due to the bankruptcy of the Company (Note A), all operations are considered discontinued.



Certain expenses attributable to discontinued operations have been allocated based upon the period to which they are applicable.  Earnings per share with respect to discontinued operations do not materially differ from earnings per share presented on net income.



- # -





INDEPENDENT ACCOUNTANTS REPORT ON CONSOLIDATED SUPPLEMENTARY INFORMATION







Ideal Accents, Inc. and Subsidiaries

(A Florida Corporation)

Miami, Florida





Our report on our review of the consolidated financial statements of Ideal Accents, Inc. and Subsidiaries for the period ended June 30, 2005 and 2004 appears on page 1.  That review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles.  The information included in the accompanying supplementary schedules is presented only for supplementary analysis purposes.  Such information has been subjected to the inquiry and analytical procedures applied in the review of the consolidated financial statements and we are not aware of any material modifications that should be made thereto.













Rotenberg & Co., LLP

Rochester, New York

August 12, 2005





|IDEAL ACCENTS, INC. AND SUBSIDIARIES             |             |  |              
|------------------------------------------------ | ----------- |  | -------------
|(A FLORIDA CORPORATION)                          |             |  |              
|Miami, Florida                                   |             |  |              
|                                                 |             |  |              
|                                                 |             |  |              
|CONSOLIDATED SUPPLEMENTARY SCHEDULES (UNAUDITED) |             |  |              
|                                                 | Unaudited  
|Six Months Ended June 30,                        | 2005        |  | 2004         
|                                                 |             |  |              
|Cost of Goods Sold                               |             |  |              
|Delivery Gas and Maintenance                     | $     2,145 |  | $      28,406
|Materials and Supplies                           | 99,067      |  | 606,425      
|Other Expenses                                   | 123         |  | 9,259        
|Shop Maintenance                                 | 1,036       |  | 13,446       
|Temp Services:  Leased Employees                 | 39,579      |  | 389,900      
|Utilities                                        | 3,080       |  | 25,000       
|                                                 |             |  |              
|Total Cost of Goods Sold                         | $ 145,030   |  | $ 1,072,436  
|                                                 |             |  |              
|Selling, General and Administrative              |             |  |              
|General Insurance                                | $     2,719 |  | $      26,959
|Legal and Accounting                             | 21,371      |  | 29,531       
|Meals and Entertainment                          | 381         |  | 13,896       
|Office Expenses                                  | 20,300      |  | 56,716       
|Property Taxes                                   |            |  | 160          
|Rent                                             | 15,091      |  | 77,129       
|Telephone                                        | 2,044       |  | 26,639       
|Temp Services:  Leased Employees                 | 9,211       |  | 289,439      
|                                                 |             |  |              
|Total Selling, General and Administrative        | $   71,117  |  | $    520,469 













MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

FOR THE THREE MONTHS ENDED

JUNE 30, 2005 AND 2004



Forward-Looking Statements.The statements contained in this report on Form 10QSB 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 sold and installed a wide range of automotive aftermarket accessories primarily to new vehicle dealers in Toronto (Scarborough), Ontario, Canada.

Ideal generated 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 10QSB.





Results Of Operations.  The following table sets forth statements of operations data of Ideal expressed as a percentage of sales for the periods indicated:

|                                                |                    |         |               |        
|----------------------------------------------- | ------------------ | ------- | ------------- | -------
|                                                | Three Months Ended
|                                                | June 30           
|                                                | 2005               |         | 2004          |        
|                                                |                    |         |               |        
|Discontinued Operations:                        |                    |         |               |        
|Sales                                           | $     35,324       | 100.00% | $ 1,593,052   | 100.00%
|                                                |                    |         |               |        
|Cost of Goods Sold                              | 29,831             | 84.45%  | 1,248,084     | 78.35% 
|                                                |                    |         |               |        
|Gross Profit                                    | 5,493              | 15.55%  | 344,968       | 21.65% 
|                                                |                    |         |               |        
|Operating Expenses                              |                    |         |               |        
|Advertising and Promotion                       | 1,020              | 2.89%   | 33,584        | 2.11%  
|Selling, General and Administrative             | 24,571             | 69.56%  | 472,582       | 29.67% 
|Depreciation and Amortization                   | 1,506              | 4.26%   | 40,987        | 2.57%  
|Interest                                        | 3,573              | 10.11%  | 72,627        | 4.56%  
|                                                |                    |         |               |        
|Total Operating Expenses                        | 30,670             | 86.82%  | 619,780       | 38.91% 
|                                                |                    |         |               |        
|                                                |                    |         |               |        
|Loss From Operations Before Provision for Taxes | (25,177)           | -71.27% | (274,812)     | -17.25%
|                                                |                    |         |               |        
|Provision for (Benefit from) Taxes              | (10)               | -0.03%  |              | 0.00%  
|                                                |                    |         |               |        
|Net Loss                                        | $    (25,167)      | -71.25% | $   (274,812) | -17.25%
|                                                |                    |         |               |        
|Comprehensive Income (Loss)                     |                    |         |               |        
|Foreign Currency Translation                    | 17,713             | 50.14%  | 9,187         | 0.58%  
|                                                |                    |         |               |        
|Comprehensive Income (Loss)                     | $      (7,454)     | -21.10% | $   (265,625) | -16.67%



Three Months Ended June 30, 2005 Compared with Three Months Ended June 30, 2004.



Sales.  Sales for the period ended June 30, 2005, decreased by $1,557,728 or 97.78% to $35,324 from $1,593,052 for the period ended June 30, 2004. The decrease was attributable to three principal factors in the Detroit, Michigan and Toronto, Ontario automotive markets. The first factor was the decline of new car sales, specifically the decline of new car sales for which accessories were purchased. The second factor was the greater decline of new car sales of domestics (i.e., cars manufactured in North America) than of imports (i.e., cars manufactured outside North America). Our Michigan stores, which contributed more than 90% of Company sales, and which accessorized domestics in far greater percentage than imports, were significantly impacted by this second factor. And the third factor was the discontinued operations and transfer of assets to a senior secured creditor for our U.S. operations and facilities and the discontinued Canadian operation.



Cost Of Goods Sold-Material Costs.  Material costs for the period ended June 30, 2005 was $18,965 or 53.69% of sales compared to $712,800 or 44.74% of sales for the period ended June 30, 2004.  The increase in material costs as a percentage of sales occurred because sales were driven almost exclusively by liquidation level pricing discounts.



Cost Of Goods Sold-Labor And Overhead.  Labor and Overhead costs for the period ended June 30, 2005 was $10,866 or 30.76% of sales compared to $535,284 or 33.60% of sales for the period ended June 30, 2004.



Selling, General And Administrative Expenses.  Selling, general and administrative expenses for the period ended June 30, 2005 was $24,571 or 69.56% of sales compared to $472,582 or 29.67% of sales for the period ended June 30, 2004. The increase in selling, general and administrative expenses as a percentage of sales occurred because cuts in these expenses were not commensurate with the drop in sales.



Depreciation And Amortization Expense.  Depreciation and amortization expense decreased by $39,481 to $1,506 during the period ended June 30, 2005 from $40,987 for the period ended June 30, 2004. The decrease was primarily attributable to the loss of assets to a secured creditor in our U.S. operations.



Interest Expense.  Interest expense for the period ended June 30, 2005 decreased by $69,054 to $3,573 from $72,627 for the period ended June 30, 2004. The decrease in interest expense is due to our surrender of assets in exchange for cancellation of installment loans and our filing of the Chapter 11 Petition.



Net Loss.  The net loss for the period ended June 30, 2005 decreased by $249,645 to a net loss of $(25,167) from a net loss of $(274,812) for the period ended June 30, 2004 due to the factors discussed above.



Comprehensive Income (Loss).  Comprehensive loss for the period ended June 30, 2005 decreased by $258,171 to a comprehensive loss of $(7,454) from a comprehensive loss of $(265,625) for the period ended June 30, 2004. The decrease in the comprehensive loss was partly attributable to the increase in the translation gain in foreign currency used in the Company's Canadian subsidiary operations.



Comprehensive income (loss) includes all changes in equity during the specified period from transactions and events from non-owner sources. The only changes in equity that are excluded from comprehensive income are those resulting from investments by owners and distributions to owners. Other comprehensive income generally includes revenues, expenses, gains and losses not included in net income in accordance with generally accepted accounting principles.





The following table sets forth statements of operations data of Ideal expressed as a percentage of sales for the periods indicated:



|                                                |                  |         |               |        
|----------------------------------------------- | ---------------- | ------- | ------------- | -------
|                                                | Six Months Ended
|                                                | June 30         
|                                                | 2005             |         | 2004          |        
|                                                |                  |         |               |        
|Discontinued Operations:                        |                  |         |               |        
|Sales                                           | $    136,100     | 100.00% | $ 3,001,480   | 100.00%
|                                                |                  |         |               |        
|Cost of Goods Sold                              | 145,030          | 106.56% | 2,320,520     | 77.31% 
|                                                |                  |         |               |        
|Gross Profit                                    | (8,930)          | -6.56%  | 680,960       | 22.69% 
|                                                |                  |         |               |        
|Operating Expenses                              |                  |         |               |        
|Advertising and Promotion                       | 1,665            | 1.22%   | 51,758        | 1.72%  
|Selling, General and Administrative             | 71,117           | 52.25%  | 993,051       | 33.09% 
|Depreciation and Amortization                   | 3,035            | 2.23%   | 82,956        | 2.76%  
|Interest                                        | 6,306            | 4.63%   | 108,501       | 3.61%  
|                                                |                  |         |               |        
|Total Operating Expenses                        | 82,123           | 60.34%  | 1,236,266     | 41.19% 
|                                                |                  |         |               |        
|                                                |                  |         |               |        
|Loss From Operations Before Provision for Taxes | (91,053)         | -66.90% | (555,306)     | -18.50%
|                                                |                  |         |               |        
|Provision for (Benefit from) Taxes              | 1,298            | 0.95%   |              | 0.00%  
|                                                |                  |         |               |        
|Net Loss                                        | $    (92,351)    | -67.86% | $   (555,306) | -18.50%
|                                                |                  |         |               |        
|Comprehensive Income (Loss)                     |                  |         |               |        
|Foreign Currency Translation                    | 37,019           | 27.20%  | 23,549        | 0.78%  
|                                                |                  |         |               |        
|Comprehensive Income (Loss)                     | $    (55,332)    | -40.66% | $   (531,757) | -17.72%



Six Months Ended June 30, 2005 Compared with Six Months Ended June 30, 2004.



Sales.  Sales for the period ended June 30, 2005, decreased by $2,865,380 or 95.47% to $136,100 from $3,001,480 for the period ended June 30, 2004. The decrease was attributable to three principal factors in the Detroit, Michigan and Toronto, Ontario automotive markets. The first factor was the decline of new car sales, specifically the decline of new car sales for which accessories were purchased. The second factor was the greater decline of new car sales of domestics (i.e., cars manufactured in North America) than of imports (i.e., cars manufactured outside North America). Our Michigan stores, which contribute more than 90% of Company sales, and which accessorize domestics in far greater percentage than imports, were significantly impacted by this second factor. And the third factor was the discontinued operations and transfer of assets to a senior secured creditor for our U.S. facilities and operations and the discontinued Canadian operation.



Cost Of Goods Sold-Material Costs.  Material costs for the period ended June 30, 2005 was $105,451 or 77.48% of sales compared to $1,467,095 or 48.88% of sales for the period ended June 30, 2004.  The increase in material costs as a percentage of sales occurred because sales were driven almost exclusively by liquidation level pricing discounts.



Cost Of Goods Sold-Labor And Overhead.  Labor and Overhead costs for the period ended June 30, 2005 was $39,579 or 29.08% of sales compared to $853,425 or 28.43% of sales for the period ended June 30, 2004.



Selling, General And Administrative Expenses.  Selling, general and administrative expenses for the period ended June 30, 2005 was $71,117 or 52.25% of sales compared to $993,051 or 33.09% of sales for the period ended June 30, 2004. The increase in selling, general and administrative expenses as a percentage of sales occurred because cuts in these expenses were not commensurate with the drop in sales.



Depreciation And Amortization Expense.  Depreciation and amortization expense decreased by $79,921 to $3,035 during the period ended June 30, 2005 from $82,956 for the period ended June 30, 2004. The decrease was primarily attributable to the loss of assets to a secured creditor in our U.S. operations.



Interest Expense.  Interest expense for the period ended June 30, 2005 decreased by $102,195 to $6,306 from $108,501 for the period ended June 30, 2004. The decrease in interest expense is due to our surrender of assets in exchange for cancellation of installment loans and our filing of the Chapter 11 Petition.



Net Loss.  The net loss for the period ended June 30, 2005 decreased by $462,955 to a net loss of $(92,351) from a net loss of $(555,306) for the period ended June 30, 2004 due to the factors discussed above.



Comprehensive Income (Loss).  Comprehensive loss for the period ended June 30, 2005 decreased by $476,425 to a comprehensive loss of $(55,332) from a comprehensive loss of $(531,757) for the period ended June 30, 2004. The decrease in the comprehensive loss was partly attributable to the increase in the translation gain in foreign currency used in the Company's Canadian subsidiary operations.



Comprehensive income (loss) includes all changes in equity during the specified period from transactions and events from non-owner sources. The only changes in equity that are excluded from comprehensive income are those resulting from investments by owners and distributions to owners. Other comprehensive income generally includes revenues, expenses, gains and losses not included in net income in accordance with generally accepted accounting principles.



Capital Resources And Liquidity.



Cash used in operations was $61,292 and $327,910 for the period ended June 30, 2005 and 2004, respectively. Reducing the cash used in operations was a result of a decrease in accounts receivable and inventory and an increase in accounts payable and accrued liabilities.



Cash used in investing activities was $Nil and $16,146 for the period ended June 30, 2005 and 2004, respectively.



Cash flow provided from financing activities was $27,994 and $322,766 for the period ended June 30, 2005 and 2004. The sources of cash from financing activities included advances from a related party, officers and stockholders. The uses of cash included repayment of debt.



The Companys current business plan concentrates on the completion of the sale of its assets and payment of its creditors pursuant to a Plan of Reorganization.  None of the Companys creditors have been discharged and no final decree has been entered.



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.  At that point, Ideal had 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.



To preserve the rights of its two U.S. Subsidiaries, Ideal Accents Inc. (Ferndale) and T.O.E., Inc. to pursue avoidance actions, Ideal filed Chapter 11 petitions for these Subsidiaries in the same Bankruptcy Court as Ideals on January 5, 2005.  Ideal has since applied for and been granted an order to jointly administer all three Bankruptcy cases.



Closing of Remaining Operations.  In light of the continued operating losses at the Scarborough facility, owned by Somani Holdings, Inc. (Somani), a Canadian Subsidiary of Ideal, Ideal seriously contemplated shutting down this facility by June 30, 2005.  Before it did, however, it attempted to negotiate the sale of Somani to its employees.  These talks carried over into April 2005 but were unsuccessful in the end.  In the absence of additional external funding, Ideal had no choice but to close Somanis operations on April 30, 2005.  Ideal has no operating facilities currently.



Chapter 11 Progress.  The Initial Case Conference and the 341 Meeting of Creditors have already been completed.  We expect to file the Disclosure Statement and the Draft Plan in the third quarter.



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, it 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:



On October 13, 2004, Ideal commenced a bankruptcy case by filing a Voluntary Petition for Relief under Chapter 11, Title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the District of New York (the Bankruptcy Court).  On January 5, 2005, Ideal filed Chapter 11 petitions for two of its non-operating U.S. Subsidiaries:  Ideal Accents, Inc. (Ferndale) and T.O.E., Inc. (U.S. Subsidiaries).



Ideal Accents, Inc., Ideal Accents, Inc. (Ferndale), and T.O.E., Inc. (collectively, the Debtors) have remained in possession of their property and continued in the management and operations of its affairs as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code.  No committee, trustee or examiner has been appointed to date.



Brief Explanation of Chapter 11



Chapter 11 of the Bankruptcy Code provides the principal framework for the reorganization of the financial affairs of businesses and, in some instances, individuals.  The filing of a petition in bankruptcy creates an estate comprised of all the debtors interest in property of any type as of the date the petition is filed.  In a Chapter 11 case, the debtor is typically authorized to remain in possession and control of its property and assets as a debtor-in-possession.  Upon the commencement and during the pendency of the case, the Bankruptcy Code imposes an automatic stay against attempts by creditors of the debtor to collect or enforce, through litigation or otherwise, claims against the debtor that arose prior to the commencement of the bankruptcy proceedings.  In a Chapter 11 case, the automatic stay provisions of the Bankruptcy Code are designed to allow the debtor time to develop, propose, confirm and implement a plan of reorganization which will provide for the payment and/or discharge of claims.  The Bankruptcy Code also provides the debtor with an exclusive period of time (which may be extended) during which only the debtor may file and seek acceptances of a plan.



A plan of reorganization sets for the proposed method of compensating the holders of claims against and interests in the debtor.  The plan of reorganization may provide for reorganization of the debtors affairs, liquidation of the assets of the debtors estates, or a combination thereof.  After the plan of reorganization has been filed, the holders of claims against and/or interests in a debtor may be permitted to vote to accept or reject the plan.  The Bankruptcy Court must find that the plan of reorganization has received sufficient acceptances to satisfy the voting requirements of the Bankruptcy Code and meets a number of other statutory tests before it may confirm the plan of reorganization.  These tests are designed to protect the rights of holders of claims or interests who do not vote to accept the plan of reorganization but who will nonetheless be bound by the plans provisions if it is confirmed by the Bankruptcy Court.



Section 1125 of the Bankruptcy Code requires a plan proponent, before soliciting acceptances of the proposed plan, to prepare a disclosure statement containing adequate information of such kind, and in such detail, as to enable a hypothetical reasonable investor to make an informed judgment about the plan.



Other Legal Actions



An employment discrimination action has been brought against Ideal by a former employee of one of Ideals subsidiaries and is under investigation by the Equal Employment Opportunity Commission.



Additionally, a creditor action has been brought against Somani Holdings, Inc., a Canadian subsidiary of Ideal, by Macleod Dixon, LLP., for legal services provided.  The amount claimed is approximately $12,000.





ITEM 2:

CHANGES IN SECURITIES:



The Company has not issued any securities since September 30, 2004.



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



Additionally, as of September 30, 2004, Ideal has had 4,312,450 exchangeable shares which have not been exchanged for common shares in Ideal.  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 for Ideal.



Therefore, as of September 30, 2004, Ideal on a fully diluted basis has had 19,349,036 common shares 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:



Exhibit

Number

Description



31

Certificate of CEO/CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

Certificate Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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: August 15, 2005

/s/ Karim Suleman

_______________________

Karim  Suleman, Chairman, President,

Chief Executive Officer and Chief Financial Officer