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, 2006



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 [ ]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)



YES [ ]

NO [X]



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, 2006

Common Stock $ .001 par value

15,563,252



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

.



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida



|FINANCIAL REPORTS
|-----------------
|AT               
|JUNE 30, 2006    

.



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


TABLE OF CONTENTS


Consolidated Balance Sheets at June 30, 2006 (Unaudited)
and December 31, 2005
2

Consolidated Statements of Changes in Stockholders' Deficit for the
Six Months Ended June 30, 2006 and 2005 (Unaudited)
3

Consolidated Statements of Operations and Comprehensive Income (Loss)
for the Six Months Ended June 30, 2006 and 2005 (Unaudited)
4

Consolidated Statements of Cash Flows from Discontinued Operations
for the Six Months Ended June 30, 2006 and 2005 (Unaudited)
5

Notes to Consolidated Financial Statements
6-8
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|IDEAL ACCENTS INC. AND SUBSIDIARIES                          |                |  |               
|------------------------------------------------------------ | -------------- |  | --------------
|(A FLORIDA CORPORATION)                                      |                |  |               
|Miami, Florida                                               |                |  |               
|                                                             |                |  |               
|CONSOLIDATED BALANCE SHEETS                                  |                |  |               
|                                                             |                |  |               
|                                                             | (Unaudited)    |  |               
|                                                             | June 30,       |  | December 31,  
|                                                             | 2006           |  | 2005          
|                                                             |                |  |               
|ASSETS                                                       |                |  |               
|                                                             |                |  |               
|Current Assets                                               |                |  |               
|Cash and Cash Equivalents                                    | $        5,232 |  | $        6,168
|Accounts Receivable - Net of Allowance for Doubtful Accounts |               |  |              
|Inventory - Net of Valuation Allowance                       |               |  |              
|Prepaid Expenses and Other Current Assets                    |               |  |              
|                                                             |                |  |               
|Total Current Assets                                         | 5,232          |  | 6,168         
|                                                             |                |  |               
|Property and Equipment - Net of Accumulated Depreciation     |               |  |              
|                                                             |                |  |               
|Other Assets                                                 |               |  |              
|                                                             |                |  |               
|Total Assets                                                 | $        5,232 |  | $        6,168
|                                                             |                |  |               
|LIABILITIES AND STOCKHOLDERS' DEFICIT                        |                |  |               
|                                                             |                |  |               
|Current Liabilities                                          |                |  |               
|Accounts Payable                                             | $    473,520   |  | $    474,572  
|                                                             |                |  |               
|Total Post-Petition Liabilities                              | $    473,520   |  | $    474,572  
|                                                             |                |  |               
|Pre-Petition Liabilities                                     | 3,242,871      |  | 3,242,871     
|                                                             |                |  |               
|Total Liabilities                                            | $ 3,716,391    |  | $ 3,717,443   
|                                                             |                |  |               
|                                                             |                |  |               
|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     
|Deficit                                                      | (4,774,721)    |  | (4,768,769)   
|Accumulated Comprehensive Loss                               | (342,145)      |  | (348,213)     
|                                                             |                |  |               
|Total Stockholders' Deficit                                  | (3,711,159)    |  | (3,711,275)   
|                                                             |                |  |               
|Total Liabilities and Stockholders' Deficit                  | $        5,232 |  | $        6,168

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' DEFICIT (UNAUDITED) |            |  |          | 
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|                                                                        |            |  |          |  |             |  |              |  | Accumulated   |  | Total        
|                                                                        | Number     |  |          |  | Additional  |  | Retained     |  | Comprehensive |  | Stockholders
|                                                                        | of         |  | Common   |  | Paid-In     |  | Earnings     |  | Income        |  | Equity       
|                                                                        | Shares     |  | Stock    |  | Capital     |  | (Deficit)    |  | (Loss)        |  | (Deficit)    
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Balance - January 1, 2005                                               | 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 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)  
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Net Income for the Period Ended                                         |           |  |         |  |            |  | 243,535      |  |              |  | 243,535      
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Comprehensive Loss for the Period Ended                                 |           |  |         |  |            |  |             |  | (115,846)     |  | (115,846)    
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Balance - December 31, 2005                                             | 15,563,252 |  | 15,563   |  | 1,390,144   |  | (4,768,769)  |  | (348,213)     |  | (3,711,275)  
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Net Loss for the Period Ended                                           |           |  |         |  |            |  | (5,952)      |  |              |  | (5,952)      
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Comprehensive Income for the Period Ended                               |           |  |         |  |            |  |             |  | 6,068         |  | 6,068        
|                                                                        |            |  |          |  |             |  |              |  |               |  |              
|Balance - June 30, 2006                                                 | 15,563,252 |  | $ 15,563 |  | $ 1,390,144 |  | $(4,774,721) |  | $(342,145)    |  | $(3,711,159) 

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,        
|                                                                                   |                    |  |                 
|                                                                                   | 2006               |  | 2005            
|Discontinued Operations:                                                           |                    |  |                 
|Sales                                                                              | $                 |  | $      35,324   
|                                                                                   |                    |  |                 
|Cost of Goods Sold                                                                 |                   |  | 29,831          
|                                                                                   |                    |  |                 
|Gross Profit                                                                       |                   |  | 5,493           
|                                                                                   |                    |  |                 
|Operating Expenses                                                                 |                    |  |                 
|Advertising and Promotion                                                          |                   |  | 1,020           
|Selling, General and Administrative                                                | 399                |  | 24,571          
|Depreciation and Amortization                                                      |                   |  | 1,506           
|Interest                                                                           | 1,667              |  | 3,573           
|                                                                                   |                    |  |                 
|Total Operating Expenses                                                           | 2,066              |  | 30,670          
|                                                                                   |                    |  |                 
|Loss From Discontinued Operations       Before Provision for Taxes                 | (2,066)            |  | (25,177)        
|                                                                                   |                    |  |                 
|Provision for (Benefit from) Taxes                                                 |                   |  | (10)            
|                                                                                   |                    |  |                 
|Net Loss                                                                           | $       (2,066)    |  | $     (25,167)  
|                                                                                   |                    |  |                 
|Comprehensive Income (Loss)                                                        |                    |  |                 
|Foreign Currency Translation                                                       | 2,932              |  | 17,713          
|                                                                                   |                    |  |                 
|Comprehensive Income (Loss)                                                        | $             866  |  | $       (7,454) 
|                                                                                   |                    |  |                 
|Income (Loss) Per Common Share -                                                   |                    |  |                 
|Basic                                                                              | $         (0.00)   |  | $         (0.00)
|Diluted                                                                            | $         (0.00)   |  | $         (0.00)
|                                                                                   |                    |  |                 
|Weighted Average Number of                                                         |                    |  |                 
|Common Shares Outstanding -                                                        |                    |  |                 
|Basic                                                                              | 15,563,252         |  | 15,563,252      
|Diluted                                                                            | 15,563,252         |  | 15,563,252      

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,                                    | 2006         |  | 2005       
|                                                             |              |  |            
|Cash Flows from Operating Activities                         |              |  |            
|Net Loss                                                     | $    (5,952) |  | $  (92,351)
|                                                             |              |  |            
|Non-Cash Adjustments:                                        |              |  |            
|Bad Debt Expense                                             |             |  | 6,563      
|Depreciation and Amortization                                |             |  | 3,035      
|                                                             |              |  |            
|Changes in Assets and Liabilities                            |              |  |            
|Accounts Receivable                                          |             |  | 33,424     
|Inventory                                                    |             |  | (2,482)    
|Prepaid Expenses and Other Current Assets                    |             |  | 155        
|Other Assets                                                 |             |  | 64         
|Accounts Payable                                             | (1,052)      |  | 40,667     
|Accrued Payroll                                              |             |  | 2,880      
|Accrued Liabilities and Other Current Liabilities            |             |  | (53,247)   
|                                                             |              |  |            
|Net Cash Flows from Operating Activities                     | (7,004)      |  | (61,292)   
|                                                             |              |  |            
|Net Cash Flows from Investing Activities                     |             |  |           
|                                                             |              |  |            
|Cash Flows from Financing Activities                         |              |  |            
|Repayment of Lines of Credit                                 |             |  | (26,919)   
|Net Repayment of Notes Payable - Officers/Stockholders       |             |  | (14,347)   
|Proceeds from Related Parties                                |             |  | 69,260     
|                                                             |              |  |            
|Net Cash Flows from Financing Activities                     |             |  | 27,994     
|                                                             |              |  |            
|Effect of Exchange Rate Changes on Cash and Cash Equivalents | 6,068        |  | 37,019     
|                                                             |              |  |            
|Net Change in Cash and Cash Equivalents                      | (936)        |  | 3,721      
|                                                             |              |  |            
|Cash and Cash Equivalents - Beginning of Period              | 6,168        |  |           
|                                                             |              |  |            
|Cash and Cash Equivalents - End of Period                    | $     5,232  |  | $     3,721
|                                                             |              | 
|                                                             |              | 
|SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR INTEREST AND TAXES  |              | 
|                                                             |              |  |            
|Interest                                                     | $     3,465  |  | $   6,306  
|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 -

Organization and Going Concern



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.



The Company ceased all U.S. operations during October 2004 and all Canadian operations during March, 2005.  The Company is currently attempting to locate a new business (operating company), and offer itself as a merger vehicle for a company that may desire to go public through a merger rather than through its own public stock offering.



The accompanying financial statements are prepared in accordance with American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7), and on a going-concern basis, which assumes continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. SOP 90-7 requires that the financial statements for periods subsequent to a Chapter 11 filing separate transactions and events that are directly associated with the reorganization from the ongoing operations of the business. The statements of financial position distinguish pre-petition liabilities from post-petition liabilities.



The financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.



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 -

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.





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



-



MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

FOR THE THREE MONTHS ENDED

JUNE 30, 2006 AND 2005



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.

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.

Currently, Ideal has no operating subsidiaries and no operating revenues.

Under its chapter 11 reorganization plan, Ideals focus is to propose a merger with a merger-partner that can help provide some recovery to Ideals stakeholders.  Whether Ideal will be successful in finding a suitable merger-partner is highly uncertain.

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.



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 as well.  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 timing of filing the Disclosure Statement and the Draft Plan will depend on how soon Ideal is able to find a suitable merger-partner.  Whether Ideal will be successful in finding a suitable merger-partner is highly uncertain.

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 continues to 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 June 30, 2006, Ideal has 15,563,252 common shares outstanding.



Additionally, as of June 30, 2006, Ideal has 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.



On a fully diluted basis therefore, as of June 30, 2006, Ideal has 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: July 31, 2006

/s/ Karim Suleman

_______________________

Karim  Suleman, Chairman, President,

Chief Executive Officer and Chief Financial Officer