SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB



(Mark one)



[X]

Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934



For the Fiscal Year December 31, 2005, or



[    ]         Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



Commission file number: 000-50427

IDEAL ACCENTS, INC.

(Exact name of registrant as specified in its charter)



| | Florida                         |  |  | 65-0888156          | 
| | ------------------------------- |  |  | ------------------- | 
| | (State or other jurisdiction of |  |  | (I.R.S. Employer    | 
| | Incorporation or organization)  |  |  | Identification No.) | 



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

(Address of principal executive offices) (Zip Code)



(416) 904-1677



Registrant's telephone number, including area code: (416) 904-1677



Securities registered under Section 12(b) of the Exchange Act: None



Securities registered under Section 12(g) of the Exchange Act:



Common Stock, par value $0.001 per share

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained herein, and will not be contained, to the best of issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

[    ]

State issuer's revenues for its most recent fiscal year: $138,773.

The aggregate market value of the Common Stock held by non-affiliates of the issuer, as of March 31, 2006, was approximately $230,344 based upon the closing price of the issuer's Common Stock reported for such date on the OTC Bulletin Board. For purposes of this disclosure, shares of Common Stock held by persons who the issuer believes beneficially own more than 5% of the outstanding shares of Common Stock and shares held by officers and directors of the issuer have been excluded because such persons may be deemed to be affiliates of the issuer. This determination is not necessarily conclusive.

As of April15, 2005, 15,563,252 shares of the issuer's Common Stock were outstanding. No documents are incorporated by reference into this Form 10-KSB.

.



TABLE OF CONTENTS



Part I



|        |                         |  | Page
|------- | ----------------------- |  | ----
|Item 1. | Description of Business |  |     
|Item 2. | Description of Business |  |     
|Item 3. | Legal Proceedings       |  |     
|        |                         |  |     



Part II



|Item 5.  | Market For Common Equity and Related Stockholder Matters                            |  | 
|-------- | ----------------------------------------------------------------------------------- |  | 
|Item 6.  | Plan of Operation                                                                   |  | 
|Item 7.  | Financial Statements                                                                |  | 
|Item 8.  | Change in and Disagreements With Accountants on Accounting and Financial Disclosure |  | 
|Item 8A. | Controls and Procedures                                                             |  | 



Part III



|Item 9.  | Director, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act |  | 
|-------- | -------------------------------------------------------------------------------------------------------------- |  | 
|Item 10. | Executive Compensation                                                                                         |  | 
|Item 11. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                 |  | 
|Item 12. | Certain Relationships and Related Transactions                                                                 |  | 
|Item 13. | Exhibits and Reports on Form 8K                                                                                |  | 
|Item 14. | Principal Accountant Fees and Services                                                                         |  | 













































.



PART I

This Annual Report on Form 10-KSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our installation services, products, our strategy, competition, expected financial performance and other aspects of our business identified in this Annual Report, as well as other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Annual Report that are not statements of historical fact may be deemed to be forward-looking statements.   Without limiting the foregoing, the words "believes, " "anticipates, " "expects, " "intends, " "projects, " or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described in Part II., Item 6, "Management's Discussion and AnalysisRisk Factors, " and elsewhere in this report.  We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or other events occur in the future

Item 1.  Description of Business.



In this report, the terms "Ideal", "Company," "we," "us" and "our" refer to Ideal Accents, Inc. The term "Common Stock " refers to the Company's Common Stock, par value $0.001 per share.  Ideal conducted business through its wholly-owned operating subsidiaries which include four Detroit, Michigan based companies and two Toronto, Ontario, Canada based companies. These companies are: Ideal Accents Inc. (Ferndale), Ideal Accents Inc. (Ann Arbor), Ideal Accents Inc. (Taylor), T.O.E., Inc. (Troy), Somani Holdings, Inc., and AutoFun Canada, Inc.



NOTICE OF FILING OF BANKRUPTCY PETITION AND SALE OF OPERATING ASSETS.  On October 13, 2004 (the Petition Date), Ideal Accents, Inc. filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New York (the Bankruptcy Court) in order to facilitate the restructuring of the Companys debt, trade liabilities and other obligations.  The Company is currently operated as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders.  In general, as a debtor-in-possession, the Company is authorized under Chapter 11 to continue to operate as an ongoing business, but not to engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court.



Prior to the Petition Date, the Companys subsidiaries engaged primarily in the business of accessorizing cars and trucks at the new vehicle dealer level, one Canadian subsidiary provides automotive accessorizing related consulting services.



A typical business transaction proceeded as follows:  (i) a new vehicle dealer offered Ideals accessories to its customer at the point of sale; (ii) the new vehicle dealers customer selected and Ideal add-on option(s) to be installed on the newly purchased vehicle; (iii) Ideal would then pick up the vehicle from the dealer or send a mobile installation unit to the dealer; (iv) Ideal would install the add-on option(s) and deliver the vehicle back to the dealer; and (v) the new vehicle dealer would then deliver the vehicle to the customer.  In most instances, therefore, Ideals direct client was the new vehicle dealer.



Ideal sought to become the premier North American automotive aftermarket accessorizer at the new vehicle dealer level through a growth strategy that included consolidating the highly fragmented industry into a branded network of installation shops and mobile installation units.



Ideal Accents, Inc. is a holding company whose primary asset includes the stock of its wholly owned U.S. and Canadian subsidiaries (the Subsidiaries).



The U.S. Subsidiary Operations  incorporated under the laws of the State of Michigan  include four wholly-owned Subsidiaries:  (i) Ideal Accents, Inc.(Ferndale) (JTM, Inc. d/b/a Motor City Sunroof); (ii) Ideal Accents Inc. (Ann Arbor); (iii) Ideal Accents, Inc.(Taylor); and (iv) T.O.E., Inc.  In the Detroit market, these Subsidiaries, at their peak, serviced up to 78% of the new vehicle dealers.  Prior to the Petition Date, operations of all four U.S. Subsidiaries were consolidated into the Ferndale location, and, as explained below, assets were transferred to a

senior secured creditor in return for the forgiveness of certain debt.  On January 5, 2005, Ideal Accents, Inc. (Ferndale) and T.O.E., Inc. filed Voluntary Chapter 11 Petitions.



The Canadian Subsidiary Operations  incorporated under the laws of Canada  include two wholly-owned Subsidiaries:  (i) Ideal Accents (Nova Scotia Company); and (ii) Ideal Accents Holdings, Inc. (Somani Holdings, Inc. (d/b/a/ Automotive Sunroof Company) and AutoFun Canada, Inc.  In the Toronto market, these Subsidiaries, at their peak, serviced up to 40% of the new vehicle dealers.



The Subsidiaries were authorized by leading tier one suppliers to Original Equipment Manufacturers (OEMs) like General Motors, Ford and Toyota to sell and install their accessory products on vehicles in the aftermarket.  The Subsidiaries maintained installation shops in the Metro Detroit and Lansing, Michigan, areas and in the Metro Toronto area (Ontario, Canada).  In addition to these shops, the Subsidiaries employed Mobile Installation Units, which offered dealers fast, efficient installation service of some of Ideals products right on-site.  The Subsidiaries direct client, in most instances, was the dealer and the Subsidiaries were paid by the dealer.  The Subsidiaries product line included styling accessories (sunroofs, leather seats, wood dashes, wheels, spoilers, ground effects, etc.), vehicle electronics (keyless entry, remote starters, vehicle tracking systems, GPS navigation systems, TVs, VCRs, DVDs, CD Changers, etc.) and performance enhancement parts (exhaust systems, etc.).  The Subsidiaries accessorizing services, therefore, addressed the styling and functional needs of new vehicle buyers and covered most vehicle makes and models.

THE FOLLOWING DISCUSSION IS APPLICABLE TO OUR BUSINESS PRIOR TO OUR FILING FOR RELIEF UNDER CHAPTER 11.

Through its subsidiaries Ideal provides the sale and installation of automobile styling accessories, vehicle electronics and performance enhancements for all makes and models of vehicles. Our automotive styling accessories include: sunroofs, leather seats, wood dashboards, custom wheels and exterior parts such as "wings." Our vehicle electronics include: vehicle tracking systems, keyless entry systems, remote starter systems, global positioning satellite ("GPS") navigation systems, auto televisions, auto personal computers, auto stereo systems and other automobile entertainment systems. Our performance enhancement items include: modified exhaust systems and engine modifications. Substantially all of our business is conducted through the new car dealerships who sell our accessories as enhancements to new vehicles . A small part of our business (less than 10% of our total sales) is retail business provided to customers who seek these same accessorization services directly from us. These services are currently offered through four installation shops in the Detroit, Michigan area and one installation shop in Toronto, Ontario, Canada. AutoFun is a consulting firm providing consulting, financial and strategic planning services to companies in the automotive accessorization industry.



Ideal's subsidiaries are as follows:



|COMPANY                         | FORM OF
ORGANIZATION | DATE OF
INCORPORATION | LOCATION                
|------------------------------- | -------------------- | --------------------- | ------------------------
|                                |                      |                       |                         
|Ideal Accents, Inc. (Ferndale)  | Michigan Corporation | June 4, 1981          | Detroit, Michigan,USA   
|                                |                      |                       |                         
|Ideal Accents, Inc. (Ann Arbor) | Michigan Corporation | May 8, 1992           | Detroit, Michigan, USA  
|                                |                      |                       |                         
|Ideal Accents, Inc. (Taylor)    | Michigan Corporation | August 22, 1996       | Detroit, Michigan, USA  
|                                |                      |                       |                         
|T.O.E., Inc.                    | Michigan Corporation | April 13,1990         | Detroit, Michigan, USA  
|                                |                      |                       |                         
|Somani Holdings Inc.            | Ontario Corporation  | May 3, 1988           | Toronto, Ontario, Canada
|                                |                      |                       |                         
|AutoFun Canada, Inc.            | Ontario Corporation  | June 30, 1999         | Toronto, Ontario, Canada



In its effort to run its installation subsidiaries cohesively and successfully, Ideal has paid particular attention to three areas: good shop management, advanced network information systems and the creation of standardized procedures for installation of products and maintaining quality control. We refer to these standardized procedures as "templates" and we stress creation and adoption of these templates in each of our installation facilities in order to standardize our operations at all of our facilities and enhance efficiency and quality control. If Ideal is able to expand its operations, we will employ these templates in each new location in order to achieve a high standard of care and efficiency wherever we do business.



The adoption and implementation of our templates is part of Ideal's ongoing commitment to creating a strong brand identity for our services among new car dealerships and dealer associations that are our principal sales channel. We believe our reputation within the new car dealer industry for consistent high standards of installations is critical to our success.



The Business. The automotive accessories business consists of three supplier tiers, as described below:



1.

"Tier One Suppliers" consist of manufacturer and suppliers of accessories to Original Equipment Manufacturers ("OEMs"). For example, a Tier-One Supplier may be an OEM manufacturer of sunroofs that we install.



2.

"Tier Two Suppliers" consist of manufacturer and suppliers of components to Tier One Suppliers. For example, a Tier Two Supplier may be a manufacturer that supplies components for a sunroof that is sold by a Tier One Supplier. The glass in a sunroof is an example of such a component that may be supplied by a Tier Two Supplier to a Tier One Supplier.



3.

"Tier Three Suppliers" consist of distributor and installers of Tier One parts on new and aftermarket vehicles. Ideal is a Tier Three Supplier and, as such, is presently authorized by many

of the principal Tier One Suppliers in the industry to install their products on aftermarket vehicles, including vehicles at the new vehicle dealer level and at the retail level.



A typical accessory transaction cycle runs as follows:



1.

At the point of sale, a new vehicle dealer will offer a choice of accessory options to a vehicle purchaser.



2.

The purchaser will make a selection and order an accessory.



3.

The vehicle is sent to an installation shop, the selected accessory is installed, and the vehicle is brought back to the dealership.



4.

The purchaser pays the dealer and takes delivery of the vehicle with the installed accessory.



Products. Automotive "parts" and automotive "accessories" fall into distinct product categories. Automotive parts are used for vehicle repair and maintenance. Automotive accessories are intended for vehicle improvement and enhancement. Ideal's business is in the latter category, automotive accessories.



Automotive accessories enhance a vehicle either stylistically or functionally. Stylistic enhancements serve the customers' desire for vehicle differentiation and personalization. Functional enhancements serve the customers' desire for vehicle security, safety, convenience, comfort, communication, connectivity, productivity, performance, and "infotainment" (information and entertainment).



Ideal presently offers the following product categories:



Automotive Styling Accessories: sunroofs, leather seats, wood dashboards, wheels, wings, etc.



Vehicle Electronics: vehicle tracking systems, keyless entry, remote starters, GPS navigation systems, TVs, VCPs, DVDs, CD Changers, stereos, etc.



Performance Enhancement: modified exhausts, ground effects, etc.



Ideal does not manufacture any of its accessories. It procures the accessories listed above from the following suppliers:



-

American Sunroof Inalfa

-

Webasto-Hollandia

-

Katzkin Leathers Inc.

-

Classic Soft Trim

-

Gemico

-

New England Wood Dash Company

-

Woodview (Ont) Ltd.

-

Kwikut Equipment Inc.

-

Rostra Precision Controls Inc.

-

Audiovox

-

Clarion

-

Dawn Enterprises

-

J. S. Parker Intl. Ltd.

-

Wilpack Industries Limited

-

Jaycore Incorporated

-

E & G Classics

-

Razzi Corporation

-

Magellan



It is not customary in the industry for Tier Three Suppliers such as Ideal to enter into long term agreements with Tier One Suppliers and exclusivity is seldom, if ever, offered by Tier One Suppliers to anyone in the accessory installation business. Discounts and payment terms are generally the only negotiable items offered by Tier One Suppliers to Tier Three Suppliers such as Ideal. Ideal markets its services and products primarily to new car dealers, who in turn market these products to their customers. The new vehicle dealer network, therefore, is Ideal's primary distribution channel. This network consists of both domestic dealers (offering vehicles made in North America) and import dealers (offering vehicles made outside North America). Each of our shops also offers accessories to the general public. This retail business, however, is a nominal portion of our business.



Ideal accessorizes all makes, models and body types in both domestic and imported vehicles. The body types include coupes, convertibles, hatchbacks, sedans, wagons, pickups, vans and SUVs (sport utility vehicles).



Competition. In the Detroit market, Ideal services 78% or 276 of the 350 new vehicle dealers. In the Toronto market, Ideal services 40% or 85 of the 210 new vehicle dealers. These arrangements with new vehicle dealers are not exclusive agreements. Large auto parts retailers such as Pep Boys and Auto Zone in the U.S., and Canadian Tire in Canada, though publicly held and well funded, are not directly competitive with Ideal, because their business is selling automotive parts at the retail level, not installing automotive accessories through new car dealers. While it would be possible for these retailers to move into the accessorization business, it would be difficult for them because of the specialization required for installations. Vehicle accessorization in its essential categories requires highly specialized installation expertise, and there is only a limited pool of such expertise available.



One potential competitor is Classic Soft Trim ("CST") - a private company. CST has been an aftermarket manufacturer of auto interior leather products since 1969. To reduce its reliance on independent distributors/installers, CST began establishing company-owned distribution/installation centers. The CST network currently comprises thirty-eight company-owned outlets in various markets throughout the U.S., including in Detroit, Michigan. CST continues to sell its products through independent authorized distributor/installers such as Ideal.  Recently, to diversify its product selection at its company-owned centers, CST has begun offering accessorization services in complimentary styling products such as wood dashes, sunroofs, spoilers and CD changers, an area that is competitive with our services.



Operational Quality/Efficiency Templates. Ideal was ISO certified in early November 2002. The current ISO standards, ISO 9001, specify the minimum standards for a quality management systems. These standards are set by the International Standards Organization in Geneva, Switzerland. The Organization accredits registrars ("Registrars") around the world to ISO certify companies that have implemented these standards. A company seeking such certification needs to do the following: 1) select a Registrar and negotiate a fee for its services; 2) be educated in the standards; 3) document its organizational structure, job functions, work processes and quality assurance procedures; 4) conform these documents to the standards; 5) implement the processes and procedures in these conformed documents; 5) have the Registrar through its ISO Auditor inspect the conformed documents and the company's implementation of the processes and procedures in these documents; 6) assuming the company passes inspection, apply for certification; 7) maintain the certification by having an annual ISO audit done on the company; 8) if there is a new facility acquired, and assuming the standards have been implemented in this new facility, apply to the Registrar to inspect the new facility and expand the scope of the certification to include this new facility; 9) three years from the certification date, apply for a new certification.



By implementing the standards described we believe we will be a leader in the industry.



Employees. Ideal has 85 employees. The breakdown among the principal subsidiaries is as follows:



|Name                | Ideal Accents, Inc. (Ferndale) | T.O.E., Inc.             | Ideal Accents, Inc. (Taylor) | Ideal Accents, Inc. (Ann Arbor) | Somani Holdings Inc.   
|------------------- | ------------------------------ | ------------------------ | ---------------------------- | ------------------------------- | -----------------------
|Number of Employees | 31 full time
20 part time      | 8 full time
11 part time | 0 full time
0 part time      | 0 full time
0 part time         | 4 full time
1 part time



None of these employees are represented by a labor contract. Our employees at our corporate head office are included in the Ferndale numbers. All of the employees in the US subsidiaries and in the corporate head office at Ferndale, including the CEO, are leased employees and are paid through an employee leasing service. The employee leasing service performs all the administrative functions associated with maintaining employees on a company payroll - functions like tax withholding, insurance premium deductions, compensation claims, etc. None of the employees in the Canadian subsidiaries, are leased employees. The administrative functions associated with these Canadian employees are performed in-house.



ITEM 2.   DESCRIPTION OF PROPERTY.



CERTAIN DISCUSSIONS WHICH FOLLOW REGARDING THE DESCRIPTION OF THE PROPERTY REFER TO THE OPERATING BUSINES PRIOR TO THE FILING OF THE CHAPTER 11 BANKRPTCY PROCEEDINGS ON OCTOBER 13, 2004.  WE NO LONGER OPERATE OR UTILIZE THE MICHIGAN FACILITIES.



We had (prior to filing the Chapter 11 proceedings) the following facilities, which we used in the operation of our business.



|Name                  | Ideal Accents, Inc. (Ferndale)                                       | T.O.E., Inc.                                              | Ideal Accents, Inc. (Taylor)                          | Ideal Accents, Inc. (Ann Arbor)                           | Somani Holdings Inc.                                                                  
|--------------------- | -------------------------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------------- | --------------------------------------------------------------------------------------
|Address               | 10200 W. Eight Mile Rd. 
Ferndale, MI
48220
$8,100/month (net)       | Consolidated into the Ferndale Facility in September 2004 | Consolidated into the Ferndale Facility in March 2004 | Consolidated into the Ferndale Facility on March 31, 2004 | 595 Middlefield Rd. Units 11 & 12 Scarborough, ON, Canada M1V 3S2
$2,881/month (gross)
|Possession            | 4 Years and 10 months with one six-year option to renew (1)          |                                                           |                                                       |                                                           | 3 Year lease
with option to renew (4)                                                 
|Total sq ft           | 28,000 sq. ft                                                        |                                                           |                                                       |                                                           | 6,255 sq. ft                                                                          
|Office Area           | 10,000 sq. ft                                                        |                                                           |                                                       |                                                           | 800 sq. ft                                                                            
|Installation Area     | 18,000 sq. ft                                                        |                                                           |                                                       |                                                           | 5,455 sq. ft                                                                          
|Installation Bays     | 20                                                                   |                                                           |                                                       |                                                           | 11                                                                                    
|Total Employees       | 51                                                                   |                                                           |                                                       |                                                           | 15                                                                                    
|Equipment & Tools     | Air chisel gun, Electric shears, air compressor, assorted hand tools |                                                           |                                                       |                                                           | Air chisel gun, Electric shears, air compressor, assorted hand tools                  
|Condition of Exterior | Good                                                                 |                                                           |                                                       |                                                           | Good                                                                                  
|Condition of Interior | Good                                                                 |                                                           |                                                       |                                                           | Good                                                                                  
|Insurance             | Adequate                                                             |                                                           |                                                       |                                                           | Adequate                                                                              









(1)

This was a 15-year net/net lease that commenced on November 1, 1999, and ended on October 31, 2014. The Company re-negotiated this lease during 2003. The new lease meets the criteria for an operating lease under FAS 13 and has a term of four years and ten months with an option to renew for six years. We no longer have an option to acquire the property. Rents escalate during the term as set out below.



January  1, 2004 to October 31, 2005 @ $ 8,100.00 per month

November 1, 2005 to October 31, 2008 @ $ 8,725.00 per month

November 1, 2008 to October 31, 2011 @ $ 9,400.00 per month

November 1, 2011 to October 31, 2014 @ $10,125.00 per month



(4):

This lease became a month-to-month lease as of February 28, 2004.



ITEM 3.   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.



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.



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.



ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS.



The shareholders of Ideal did not vote on any matters during the year ended December 31, 2005.



PART II



ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.



Our Common Stock is quoted on the National Association of Securities Dealers' OTC Bulletin Board under the symbol IACE. Our shares were listed on the OTC Bulletin Board as of February 10, 2004 and did not trade during 2003.



As of December 31, 2005, the number of record holders of Common Stock was approximately 702.  The most recent bid price for the Companys shares of common stock was $0.002 per share.



The following table sets forth, for the quarter indicated, the range of high and low bid prices of the Companys commons stock:



|             | HIGH (in cents) | LOW (in cents)
|------------ | --------------- | --------------
|Fiscal 2005  | .05             | .015          
|March 31     | .04             | .015          
|June 30      | .045            | .015          
|September 30 | .05             | .035          
|December 31  | .04             | .03           



DIVIDENDS.



We have not declared any cash dividends on our common stock. We plan to retain any future earnings for use in the expansion of our business. Any decisions as to future payment of dividends will depend on our earnings, financial position, and such other factors, as the Board of Directors deems relevant.



SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS.



On December 13, 2001 Ideal adopted the 2001 Stock Option Plan (the "Plan") under which our officers, directors, consultants, advisors and employees may receive stock options. The aggregate number of shares that may be issued under the Plan is 5,000,000 shares. The purpose of the Plan is to assist Ideal and its subsidiaries and affiliates in attracting and retaining qualified individuals to serve as directors, officers, consultants, advisors, and employees of our company who will contribute to our company's success and to achieve long-term objectives that will inure to the benefit of all shareholders of Ideal. Options granted under the Plan will be either "incentive stock options," intended to qualify as such under the provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or "nonqualified stock options." For purposes of the Plan, the term "subsidiary" shall mean "subsidiary corporation," as such term is defined in section 424(f) of the Code, and "affiliate" shall have the meaning set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").



The Plan will be administered by a Committee of the Board of Directors who will establish the terms under which options are granted. No options have been granted under the Plan as of the date of this report.



RECENT SALES OF UNREGISTERED SECURITIES.



During the year ended December 31, 2005, the Company did not issue any shares in its common stock:



ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS

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 Detroit, Michigan and Toronto (Scarborough), Ontario, Canada.

Ideal generated revenues 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 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.



ITEM 7   FINANCIAL STATEMENTS



See the financial statements and report of Rotenberg & Co., LLP set forth in Item 13, which is incorporated herein by reference.



ITEM 8   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE



None.



ITEM 8a  CONTROLS AND PROCEDURES



(a)

Disclosure Controls and Procedures. The Company's management, with the participation of the principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Company, respectively, have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective.



(b)

Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, he Company's internal control over financial reporting.



PART III



ITEM 9   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



BOARD OF DIRECTORS



The following individuals sit on the Board of Directors of Ideal. Each director will serve until the next meeting of shareholders or until replaced. Each individual's background is of material importance to Ideal.



Karim K. Suleman

Chairman of the Board of Directors

James A. Ditanna

Director



MANAGEMENT



Karim K. Suleman

CEO, President, CFO, Secretary and Treasurer





KARIM SULEMAN, CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER,

CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER

AGE: 45



Mr. Suleman holds Bachelors Degrees in Commerce and Law from the University of British Columbia and has been involved in business development since 1987. Mr. Suleman has experience in the development of several businesses, including a real estate development firm, two publicly held high-tech companies and a garment import and distribution company. Mr. Suleman's expertise includes strategic management, business operations, personnel development, and public finance. In 1999, Mr. Suleman co-founded with Mr. Somani (see above) AutoFun Canada, Inc., a consulting firm to the automotive aftermarket industry. Mr. Suleman has served as Vice President, Business Development of Automotive Sunroof Company (Pickering) since 1996 and as President of AutoFun Canada, Inc. since 1999. Mr. Suleman regularly devotes not less than 8 hours per business day to the operation of Ideal and has other business activities outside of Ideal.



JAMES A. DITANNA, DIRECTOR

AGE:  54



Mr. Ditanna, is a graduate of Drexel University, Philadelphia, Pennsylvania, receiving a Bachelor of Science, Business Administration with an Accounting and Taxation Major.  He also received an MBA/MGA from the University of Pennsylvania, Wharton, and graduated Magna Cum Laude.  He brings a wealth of experience and previously served as Chief Financial Officer of NEXMED, Inc., a publicly traded company having offices in Princeton, New Jersey, Hong Kong, Peru, and China.



Legal Proceedings. No officer or director or significant employee of Ideal has been involved in legal proceedings that would be material to an evaluation of our management.



COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT



Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's Directors and officers, and persons who own more than 10% of a registered class of the Company's equity securities ("Section 16 Persons"), to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Section 16 Persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file. Based on the Company's review of the forms it has received, on other reports filed by Section 16 Persons with the SEC and on the Company's records, the Company believes that during 2005, Joseph P. O'Connor, Ayaz M. Somani and Karim Suleman failed to timely file a Form 3 to report their ownership of shares of Common Stock.



ITEM 10 EXECUTIVE COMPENSATION



The following summary compensation table sets forth the cash compensation earned for the fiscal years ended December 31, 2004 and 2005, by Ideal's highest compensated executive officers and the compensation to be paid to such officers in 2006.



|NAME & PRINCIPAL POSITION                                                     | YEAR | SALARY        
|----------------------------------------------------------------------------- | ---- | --------------
|                                                                              |      |               
|Joseph P. OConnor, Chairman & CEO (former)                                   | 2005 | $            0
|                                                                              | 2004 | $ 131,250     
|                                                                              |      |               
|Ayaz M. Somani, President (former)                                            | 2005 | $            0
|                                                                              | 2004 | $            0
|                                                                              |      |               
|Karim Suleman, Chairman, President, CEO, CFO, Secretary, Treasurer & Director | 2006 | $            0
|                                                                              | 2005 | $            0
|                                                                              | 2004 | $ 125,000     
|                                                                              |      |               
|James A. Ditanna, Director                                                    | 2006 | $           0 
|                                                                              | 2005 | $           0 
|                                                                              | 2004 | $           0 



Note: We have entered into no employment agreements with these officers. We are in Chapter 11 proceedings and are currently not paying any salaries.



As of the date hereof there have been no stock options issued pursuant to the 2001 Stock Option Plan and no warrants or other rights to acquire securities outstanding.



ITEM 11

SECURITY OWNERSHIP AND CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS



We have 15,563,252 shares of common stock issued and outstanding. Our wholly owned subsidiary, Ideal Accents Holdings, Inc. has 4,312,450 "exchangeable" shares issued and outstanding. We have entered into an Exchangeable Shares Support Agreement dated December 13, 2001 among Ideal, Ideal Accents [Nova Scotia] Company and Ideal Accents Holdings, Inc. Pursuant to this agreement, the exchangeable shares (i) carry voting rights of one vote per share on all matters coming before the shareholders of Ideal and (ii) are exchangeable at any time for common stock of Ideal. Consequently, for purposes of describing shareholder voting rights, we have included in the table below the number of common shares of Ideal and the number of exchangeable shares of Ideal Accents Holdings, Inc. held by the officers and directors of Ideal. The last column of the table below reflects the voting rights of each officer and/or director as a percentage of the total voting shares (common shares of Ideal and exchangeable shares of Ideal Accents Holdings, Inc.). The total number of voting shares, including the common shares of Ideal and exchangeable shares of Ideal Accents Holdings, Inc., is 19,875,702 shares. Other than Joseph O'Connor, Ayaz Somani, Karim Suleman and AVG (OEAM) Inc., no party holds more than 5% of the aggregated outstanding common shares of Ideal and outstanding exchangeable shares of Ideal Accents Holdings, Inc.



|Name and Address
Of Beneficial Owner(3)                                                                   | Common Stock
Of Ideal | Exchangeable Shares of Ideal Accents Holdings, Inc. | Percentage of Class Held      | Total Number of Shares Entitled to Vote | Percentage of Voting Rights on all Matters Before Ideal Shareholders
|--------------------------------------------------------------------------------------------------------- | --------------------- | --------------------------------------------------- | ----------------------------- | --------------------------------------- | --------------------------------------------------------------------
|                                                                                                          |                       |                                                     |                               |                                         |                                                                     
|Joseph O'Connor, Former Chairman, CEO and Director                                                        | 4,749,481 (1)         | -0-                                                 | 30.52% of Ideal Common Shares | 4,749,481                               | 23.90%                                                              
|James Erickson, Former
Vice President T.O.E., Inc                                                         | 275,000               | -0-                                                 | 1.77% of Ideal Common Shares  | 275,000                                 | 1.38%                                                               
|Thomas Sullivan, Former
Vice President Ideal Accents, Inc. (Taylor), Secretary and Treasurer T.O.E., Inc. | 150,483               | -0-                                                 | .97% of Ideal Common Shares   | 150,483                                 | 0.76 %                                                              
|George Walch, Former
Secretary and Treasurer Ideal Accents, Inc. (Taylor)                                 | 75,036                | -0-                                                 | .48% of Ideal Common Shares   | 75,036                                  | 0.38%                                                               
|Ayaz Somani, Former President and Director                                                                | -0-                   | 2,281,200 (1) (2)                                   | 52.90% of Exchangeable Shares | 2,281,200                               | 11.48%                                                              



|Karim Suleman, Chairman, President, Chief Executive Officer and Chief Financial Officer, Secretary and Treasurer | -0- | 2,031,250 (1) | 47.10% of Exchangeable Shares | 2,031,250 | 10.22%
|---------------------------------------------------------------------------------------------------------------- | --- | ------------- | ----------------------------- | --------- | ------
|                                                                                                                 |     |               |                               |           |       
|James A. Ditanna, Director                                                                                       | -0- | -0-           | -0-                           | -0-       |       
|                                                                                                                 |     | Total         |                               | 9,562,450 | 48.11%





COLLECTIVELY, THE FORMER AND CURRENT OFFICERS AND DIRECTORS OF IDEAL OWN 48.11% OF ALL SHARES ELIGIBLE TO VOTE ON MATTERS TO BE DECIDED BY SHAREHOLDERS OF IDEAL.



(1)

Shares held by Messrs. O'Connor, Suleman, Somani and Mr. Somani's wife, are subject to a performance escrow pursuant to which such shares will only be released from escrow upon Ideal's attaining certain financial targets.



Joseph P. O'Connor, Ayaz Somani, Naseem Somani, and Karim Suleman*, all former directors or family members of directors of Ideal, placed the following shares in escrow with the law firm, McLeod Dixon LLP, Toronto, Canada, as Escrow Agents under an Escrow Agreement with Ideal.



The shares held in escrow are as follows:



|Joseph OConnor | 4,749,481 | Common Shares      
|--------------- | --------- | -------------------
|Ayaz Somani     | 1,520,800 | Exchangeable Shares
|Naseem Soman    | 760,400   | Exchangeable Shares
|Karim Suleman*  | 2,031,250 | Exchangeable Shares





The shares represent 45.59% of the voting shares entitled to vote on all matters before Ideal shareholders (which includes the common shares of Ideal and the exchangeable shares of Ideal Accents Holdings, Inc.) and will be released from escrow if the following performance targets for Ideal are met:



A prorated 25% of each of the parties' escrowed shares will be released from the escrow upon the happening of each of the following performance targets:



At such time as Ideal's consolidated gross annual revenue reaches $25,000,000 for any fiscal year, 25% of the escrowed shares of each party shall be released



At such time as Ideal's consolidated gross annual revenue reaches $50,000,000 for any fiscal year, 25% of the escrowed shares of each party shall be released



At such time as Ideal's consolidated gross annual revenue reaches $75,000,000 for any fiscal year, 25% of the escrowed shares of each party shall be released



At such time as Ideal's consolidated gross annual revenue reaches $100,000,000 for any fiscal year, 25% of the escrowed shares of each party shall be released



There is no assurance that any of the above performance targets will be met. If some or all of the above performance targets are not met, shares held in escrow will remain in escrow indefinitely. These releases from escrow are further conditioned on Ideal being profitable, on a pre-tax basis, at the fiscal year-end in which the gross annual revenue target was reached or surpassed. The escrowed shares are not eligible to receive dividends until released from escrow. The record owners of the escrowed shares may vote such shares while they are in escrow. The escrowed shares may be released from the escrow in the event of a merger or acquisition of Ideal.



(2)

760,400 of Mr. Somani's exchangeable shares are held by his wife.



(3)

The respective addresses of our officers and directors listed above are as follows:



Joseph O'Connor, 27490 Spring Valley, Farmington Hills, MI 48336 USA



Ayaz Somani, 151 Sandcherry Court, Pickering, ON L1V 6S8, Canada



Karim Suleman*, 5 Mary Elizabeth Cres., Markham, ON L3R 9M2 Canada



James Erickson, 1223 Lakespur Drive, Kansasville, WI 53138 USA



Thomas Sullivan, 1094 Cora, Wyandotte, MI 48338 USA



George Walch, 19762 Donna, Livonia, MI 48152 USA



James A. Ditanna*, 200 Fisher Road, Jenkintown, PA 19046 USA



*  Current officers only



ITEM 12

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



None



ITEM 13   EXHIBITS AND REPORTS ON FORM 8-K



FINANCIAL STATEMENTS INCORPORATED BY REFERENCE



The Financials  Statements and Report of Rotenberg & Co. LLP which are set forth in the index to Consolidated  Financial  Statements on pages F-1 through F-24 of this report are filed as part of this report.





.





|Report of Rotenberg & Co. LLP                                        | F-2
|-------------------------------------------------------------------- | ---
|Consolidated Balance Sheets                                          | F-3
|Consolidated Statements of Changes in Stockholders Equity (Deficit) | F-4
|Consolidated Statement of Operations                                 | F-5
|Consolidated Statement of Cash Flows                                 | F-6
|Notes to Consolidated Financial Statements                           | F-7





EXHIBITS



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



Forms 8-K



(1)

Form 8-K filed on the 14th day of October, 2004, advising that on October 13, 2004, Ideal Accents, Inc (Ideal) filed a voluntary Petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) (Case No. 04-16632)



(2)

Form 8-K filed on the 11th day of November, 2004, advising that on the 15th day of October, 2004, Joseph OConnor resigned as Chairman and Chief Executive Officer of the Company; On the 27th day of October, 2004, Ayaz M. Somani resigned as Director, President and Chief Financial Officer of the Company; Mr. Karim Suleman now remains as our Executive Vice President, Chief Financial Officer, Secretary and Sole Director.





ITEM 14   PRINCIPAL ACCOUNTANT FEES AND EXPENSES



Audit Fees.  The Company paid to Rotenberg & Co., LLP audit and audit related fees of approximately $2,500 and $78,500 for 2005 and 2004, respectively.



Tax Fees.  The Company paid to Rotenberg & Co., LLP fees for tax services for 2005 and 2004 of approximately $0 and $9,025, respectively.

.



* * * * *























.



SIGNATURES



Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the  undersigned,  thereunto duly  authorized,  on the 30th day of March, 2006.



IDEAL ACCENTS, INC.





By:

/s/   Karim Suleman

Karim Suleman, Chairman, President,

Chief Executive Officer and Chief

Financial Officer

































































.



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida



|FINANCIAL REPORTS
|-----------------
|AT               
|DECEMBER 31, 2005

.



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


TABLE OF CONTENTS


Consolidated Balance Sheets at December 31, 2005 and 2004
2

Consolidated Statements of Changes in Stockholders' Deficit for the
Years Ended December 31, 2005 and 2004
3

Consolidated Statements of Operations and Comprehensive Loss for the
Years Ended December 31, 2005 and 2004
4

Consolidated Statements of Cash Flows for the Years Ended December 31,
2005 and 2004
5

Notes to Consolidated Financial Statements
6-12

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

Consolidated Supplementary Schedules for the Years Ended December 31,
2005 and 2004
13
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------















REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM







To the Board of Directors

and Stockholders

Ideal Accents, Inc. and Subsidiaries



We have audited the accompanying consolidated balance sheet of Ideal Accents, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2005.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ideal Accents, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.











Rotenberg & Co., LLP

Rochester, New York

March 31, 2006



|IDEAL ACCENTS INC. AND SUBSIDIARIES                          |               |  |                 
|------------------------------------------------------------ | ------------- |  | ----------------
|(A FLORIDA CORPORATION)                                      |               |  |                 
|Miami, Florida                                               |               |  |                 
|                                                             |               |  |                 
|CONSOLIDATED BALANCE SHEETS                                  |               |  |                 
|                                                             |               |  |                 
|December 31,                                                 | 2005          |  | 2004            
|                                                             |               |  |                 
|ASSETS                                                       |               |  |                 
|                                                             |               |  |                 
|Current Assets                                               |               |  |                 
|Cash and Cash Equivalents                                    | $       6,168 |  | $              
|Accounts Receivable - Net of Allowance for Doubtful Accounts |              |  | 48,526          
|Inventory - Net of Valuation Allowance                       |              |  | 22,885          
|Prepaid Expenses and Other Current Assets                    |              |  | 7,927           
|                                                             |               |  |                 
|Total Current Assets                                         | 6,168         |  | 79,338          
|                                                             |               |  |                 
|Property and Equipment - Net of Accumulated Depreciation     |              |  | 12,273          
|                                                             |               |  |                 
|Other Assets                                                 |              |  | 3,990           
|                                                             |               |  |                 
|Total Assets                                                 | $      6,168  |  | $      95,601   
|                                                             |               |  |                 
|LIABILITIES AND STOCKHOLDERS' DEFICIT                        |               |  |                 
|                                                             |               |  |                 
|Current Liabilities                                          |               |  |                 
|Accounts Payable                                             | $    474,572  |  | $    451,975    
|                                                             |               |  |                 
|Total Post-Petition Liabilities                              | $    474,572  |  | $    451,975    
|                                                             |               |  |                 
|Pre-Petition Liabilities                                     | 3,242,871     |  | 3,427,258       
|                                                             |               |  |                 
|Total Liabilities                                            | $ 3,717,443   |  | $ 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       
|Deficit                                                      | (4,768,769)   |  | (4,919,953)     
|Accumulated Comprehensive Loss                               | (348,213)     |  | (269,386)       
|                                                             |               |  |                 
|Total Stockholders' Deficit                                  | (3,711,275)   |  | (3,783,632)     
|                                                             |               |  |                 
|Total Liabilities and Stockholders' Deficit                  | $      6,168  |  | $      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' DEFICIT |            |  |           | 
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|                                                            | Number     |  |           |  | Additional  |  |              |  | Accumulated     |  | Total        
|                                                            | of         |  | Common    |  | Paid-In     |  |              |  | Comprehensive   |  | Stockholders
|                                                            | Shares     |  | Stock     |  | Capital     |  | Deficit      |  | Loss            |  | 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       | 626,666    |  | 626       |  | 82,633      |  |             |  |                |  | 83,259       
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Common Stock Issued in Exchange of Debt                     | 3,834,783  |  | 3,835     |  | 1,116,835   |  |             |  |                |  | 1,120,670    
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Common Stock Issued in Exchange for
Stock Subscriptions     | 145,040    |  | 145       |  | 92,251      |  |             |  |                |  | 92,396       
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Common Stock Issued in Exchange for
Exchangeable Stock      | 938,508    |  | 938       |  | (938)       |  |             |  |                |  |             
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Net Loss                                                    |           |  |          |  |            |  | (1,820,392)  |  |                |  | (1,820,392)  
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Comprehensive Loss                                          |           |  |          |  |            |  |             |  | (108,508)       |  | (108,508)    
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Balance - December 31, 2004                                 | 15,563,252 |  | 15,563    |  | 1,390,144   |  | (4,919,953)  |  | (269,386)       |  | (3,783,632)  
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Net Income                                                  |           |  |          |  |            |  | 151,184      |  |                |  | 151,184      
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Comprehensive Loss                                          |           |  |          |  |            |  |             |  | (78,827)        |  | (78,827)     
|                                                            |            |  |           |  |             |  |              |  |                 |  |              
|Balance - December 31, 2005                                 | 15,563,252 |  | $ 15,563  |  | $ 1,390,144 |  | $(4,768,769) |  | $(348,213)      |  | $(3,711,275) 

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 LOSS         
|                                                                      |  |         |  |             |                 |  |                  
|For the Years Ended December 31,                                      |  |         |  |             | 2005            |  | 2004             
|                                                                      |  |         |  |             |                 |  |                  
|Discontinued Operations:                                              |  |         |  |             |                 |  |                  
|Sales                                                                 |  |         |  |             | $ 138,773       |  | $ 4,914,072      
|                                                                      |  |         |  |             |                 |  |                  
|Cost of Goods Sold                                                    |  |         |  |             | 147,879         |  | 3,865,901        
|                                                                      |  |         |  |             |                 |  |                  
|Gross Profit                                                          |  |         |  |             | (9,106)         |  | 1,048,171        
|                                                                      |  |         |  |             |                 |  |                  
|Operating Expenses (Income)                                           |  |         |  |             |                 |  |                  
|Advertising and Promotion                                             |  |         |  |             | 1,698           |  | 46,592           
|Asset Impairment Writedown                                            |  |         |  |             | 44,507          |  | 818,121          
|Selling, General and Administrative                                   |  |         |  |             | 89,392          |  | 1,684,802        
|Forgiveness of Debt                                                   |  |         |  |             | (311,595)       |  |                 
|Depreciation and Amortization                                         |  |         |  |             | 4,643           |  | 135,948          
|Impairment of Goodwill                                                |  |         |  |             |                |  | 21,013           
|Interest                                                              |  |         |  |             | 9,741           |  | 162,087          
|                                                                      |  |         |  |             |                 |  |                  
|Total Operating Expenses (Income)                                     |  |         |  |             | (161,614)       |  | 2,868,563        
|                                                                      |  |         |  |             |                 |  |                  
|Income (Loss) From Discontinued Operations Before Provision for Taxes |  | 152,508 |  | (1,820,392)
|                                                                      |  |         |  |             |                 |  |                  
|Provision for Taxes                                                   |  |         |  |             | 1,324           |  |                 
|                                                                      |  |         |  |             |                 |  |                  
|Net Income (Loss)                                                     |  |         |  |             | 151,184         |  | (1,820,392)      
|                                                                      |  |         |  |             |                 |  |                  
|Comprehensive Income (Loss)                                           |  |         |  |             |                 |  |                  
|Foreign Currency Translation                                          |  |         |  |             | (78,827)        |  | (108,508)        
|                                                                      |  |         |  |             |                 |  |                  
|Comprehensive Income (Loss)                                           |  |         |  |             | $ 72,357        |  | $(1,928,900)     
|                                                                      |  |         |  |             |                 |  |                  
|Loss Per Common Share -                                               |  |         |  |             |                 |  |                  
|Basic                                                                 |  |         |  |             | $          0.01 |  | $          (0.21)
|Diluted                                                               |  |         |  |             | $          0.01 |  | $          (0.21)
|                                                                      |  |         |  |             |                 |  |                  
|Weighted Average Number of Common Shares Outstanding -                |  |         |  |            
|Basic                                                                 |  |         |  |             | 15,563,252      |  | 8,624,796        
|Diluted                                                               |  |         |  |             | 15,563,252      |  | 8,624,796        

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                         |               |  |                
|                                                              |               |  |                
|For the Years Ended December 31,                              | 2005          |  | 2004           
|                                                              |               |  |                
|Cash Flows from Operating Activities                          |               |  |                
|Net Income (Loss)                                             | $    151,184  |  | $(1,820,392)   
|Non-Cash Adjustments                                          |               |  |                
|Asset Impairment Writedown                                    | 13,541        |  | 818,121        
|Bad Debt Expense                                              | 11,974        |  | 14,840         
|Common Stock Issued in Exchange for Services Rendered         |              |  | 83,259         
|Depreciation and Amortization                                 | 4,643         |  | 135,948        
|Forgiveness of Debt                                           | (311,595)     |  |               
|Impairment of Goodwill                                        |              |  | 21,013         
|Inventory Impairment Writedown                                | 31,156        |  |               
|Changes in Assets and Liabilities                             |               |  |                
|Accounts Receivable                                           | 38,536        |  | 263,538        
|Inventory                                                     | (3,728)       |  | 51,003         
|Prepaid Expenses and Other Current Assets                     | (227)         |  | (2,303)        
|Other Assets                                                  | (96)          |  | 24,152         
|Accounts Payable                                              | 37,597        |  | 22,300         
|Accrued Payroll                                               | 5,721         |  | 28,190         
|Accrued Liabilities and Other Current Liabilities             | (39,255)      |  | 151,079        
|                                                              |               |  |                
|Net Cash Flows from Operating Activities                      | (60,549)      |  | (209,252)      
|                                                              |               |  |                
|Cash Flows from Investing Activities                          |               |  |                
|Purchases of Property and Equipment                           |              |  | (19,125)       
|                                                              |               |  |                
|Net Cash Flows from Investing Activities                      |              |  | (19,125)       
|                                                              |               |  |                
|Cash Flows from Financing Activities                          |               |  |                
|Repayment of Lines of Credit                                  | (42,902)      |  | (29,855)       
|Repayment of Notes and Capital Leases Payable                 |              |  | (117,948)      
|Proceeds (Repayment) of Notes Payable - Officers/Stockholders | (17,923)      |  | 33,881         
|Proceeds from Related Parties                                 | 206,369       |  | 352,397        
|Proceeds from Issuance of Stock Subscriptions                 |              |  | 36,284         
|Proceeds from Issuance of Common Stock                        |              |  | 40,000         
|                                                              |               |  |                
|Net Cash Flows from Financing Activities                      | 145,544       |  | 314,759        
|                                                              |               |  |                
|Effect of Exchange Rate Changes on Cash and Cash Equivalents  | (78,827)      |  | (97,398)       
|                                                              |               |  |                
|Net Change in Cash and Cash Equivalents                       | 6,168         |  | (11,016)       
|                                                              |               |  |                
|Cash and Cash Equivalents - Beginning of Year                 |              |  | 11,016         
|                                                              |               |  |                
|Cash and Cash Equivalents - End of Year                       | $       6,168 |  | $             





|                                                            |                 |  |                
|----------------------------------------------------------- | --------------- |  | ---------------
|                                                            |                 |  |                
|                                                            |                 |  |                
|                                                            |                 |  |                
|CONSOLIDATED STATEMENTS OF CASH FLOWS - continued           |                 | 
|                                                            |                 |  |                
|For the Years Ended December 31,                            | 2005            |  | 2004           
|                                                            |                 |  |                
|NON-CASH INVESTING AND FINANCING TRANSACTIONS               |                 | 
|                                                            |                 | 
|Common Stock Issued in Exchange for Services Rendered       | $              |  | $      83,259  
|Common Stock Issued in Exchange of Debt                     |                |  | 1,120,670      
|Common Stock Issued in Exchange of Stock Subscriptions      |                |  | 92,396         
|Common Stock Issued in Exchange for Exchangeable Stock      |                |  | 938            
|                                                            |                 |  |                
|                                                            |                 | 
|SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR INTEREST AND TAXES |                 | 
|                                                            |                 |  |                
|Interest                                                    | $        9,741  |  | $    162,087   
|Taxes Paid                                                  | $        1,324  |  | $             

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.



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.



- continued -

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



- 6 -







IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note A -

Organization and Going Concern - continued



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.



Note B -

Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Ideal Accents, Inc. and its majority owned subsidiaries.

All significant intercompany balances and transactions have been eliminated in the consolidation.



Method of Accounting

The Company maintains its books and prepares its financial statements on the accrual basis of accounting. The company records revenue when the services have been rendered and the product has been delivered.



Cash and Cash Equivalents

Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.



Property, Equipment and Depreciation

Property and equipment are presented at original cost, less accumulated depreciation.  Depreciation is computed on various methods at annual rates based upon estimated useful lives as follows:



Vehicles

5 Years

Office Equipment, Furniture and Fixtures

5 - 10 Years

Leasehold Improvements

5 - 39 Years



The cost of significant improvements to property and equipment are capitalized.  Maintenance and repairs are charged to expense as incurred.  Upon sale or retirement of property and equipment, the cost and related depreciation are eliminated from the accounts, and any resulting gain or loss is recognized.





- continued -

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



- 7 -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note B -

Summary of Significant Accounting Policies - continued



Advertising Expenses

Advertising expenses are charged against operations during the period incurred, except for direct-response advertising costs, which are capitalized and amortized over periods not exceeding one year. Advertising expenses charged against operations were $1,698 and $46,592 for the years ended December 31, 2005 and 2004, respectively.  The Company did not incur any direct-response advertising costs during 2005 and 2004.



Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred tax assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.



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.



Earnings per Share

Earnings per share of common stock are computed in accordance with SFAS No, 128, Earnings per Share.  Basic earnings per share are computed by dividing income or loss available to common shareholders by the weighted-average number of common shares outstanding for each period.  Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding assuming conversion of all potentially dilutive stock options, warrants and convertible securities, if dilutive. Common stock equivalents that are anti-dilutive are excluded from both diluted weighted average number of common shares outstanding and diluted earnings per share.







- continued -

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



- 8 -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note B -

Summary of Significant Accounting Policies - continued



Transactions involving common stock or common stock equivalents affecting weighted average number of shares outstanding and earnings per share include common shares designated for the performance escrow and the issuance of exchangeable shares on December 13, 2001.  As of December 31, 2004, 4,749,481 of common shares outstanding were restricted to the performance escrow account and, accordingly, the weighted average number of shares have been removed from the weighted average computation of both basic and diluted earnings per share as the conditions for release had not been met.  The amount of exchangeable shares that were restricted to the performance escrow account were 4,312,450 as of December 31, 2004 and, accordingly, were removed from the weighted average computation of both basic and diluted earnings per share as the conditions for release had not been met and hence could not be convertible into Ideals common stock.



Financial Instruments

The Companys financial instruments consist of cash, long-term investments, and accounts payable. Unless otherwise noted, it is managements opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying value, unless otherwise noted.



Asset Impairment

In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company assesses all long-lived assets for impairment at least annually or whenever events or circumstances indicate that the carrying amount may not be recoverable.



Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.



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



- 9 -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note C -

Property and Equipment

Property and equipment consisted of the following:



|December 31,                    | 2005            | 2004        
|------------------------------- | --------------- | ------------
|                                |                 |             
|Vehicles                        | $              | $        830
|Equipment                       |                | 53,465      
|Office Equipment                |                | 35,877      
|Leasehold Improvements          |                | 67,294      
|                                | $              | $ 157,466   
|Less:  Accumulated Depreciation |                | 145,193     
|                                |                 |             
|Net Property and Equipment      | $              | $   12,273  



Depreciation expense for the years ended December 31, 2005 and 2004 $4,643 was and $84,164, respectively.



Note D -   Pre-Petition Liabilities

Pre-PetitionLiabilities consisted of the following:



|December 31,                                               | 2005        | 2004         
|---------------------------------------------------------- | ----------- | -------------
|                                                           |             |              
|Accounts Payable                                           | $ 1,800,796 | $   1,830,475
|Lines of Credit                                            | 85,647      | 128,549      
|Note Payable  Charter Bank                                | 5,346       | 5,346        
|Capital Lease Payable  GE Capital                         | 57,682      | 51,691       
|Capital Lease Payable  Compaq Financial Services          | 33,611      | 30,555       
|Capital Lease Payable  Hewlett-Packard Financial Services | 18,516      | 16,833       
|Accrued Payroll                                            | 46,332      | 49,917       
|Due to Related Party                                       | 1,100,351   | 1,148,709    
|Accrued Liabilities and Other Current Liabilities          | 9,960       | 62,630       
|Notes Payable  Officers/Stockholders                      | 84,630      | 102,553      
|                                                           |             |              
|Total Pre-Petition Liabilities                             | $ 3,242,871 | $ 3,427,258  



Note E -

Related Party Transactions



Due to Related Party

The Company had cash advances and payments from AVG, which is owned by principal stockholders of the Company, amounting to $1,100,351 and $1,148,709, at December 31, 2005 and 2004, respectively.  The notes contain no formal repayment terms, and no interest has been imputed for the fiscal year 2005 due to the filing of bankruptcy of the Company



- continued -



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



- 10 -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note E -

Related Party Transactions - continued



Notes Payable - Officers/Stockholders

During 2005 and 2004, the Company received advances and payments from principal stockholders of $84,630 and $102,553. The notes contain no formal repayment terms, and no interest has been imputed for the years ending December 31, 2005 and 2004.



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.



Under the escrow agreement, shares will be released when revenue, in any fiscal year, exceeds the following levels and the Company was profitable on a pre-tax basis for that fiscal year:



•

Twenty-five percent of the escrowed shares when aggregate consolidated revenues exceed $25,000,000;

•

Additional twenty-five percent of the escrowed shares when aggregate consolidated revenue exceeds $50,000,000;

•

Additional twenty-five percent of the escrowed shares when aggregate consolidated revenues exceeds $75,000,000;

•

The remaining escrowed shares when aggregate consolidated revenue exceeds $100,000,000.



The release of the shares from escrow will result in compensation expense to the company based upon the fair value of the shares at the date the shares are released.



Note G -

Other Matters



Stock Option Plan

In December 2001, the Company adopted a stock option plan in which officers, directors, and employees, as well as external consultants and advisors may participate. The maximum number of shares available under the plan is 5,000,000. The terms under which the options are granted is determined by the board of directors.  No options have been granted as of the date of these financial statements.



Note H -

Common Stock Transactions

During the quarter ended March 31, 2004, the Company issued 626,666 of common stock to officers of the Company for services rendered during 2004 in the amount of $83,259.



- continued -

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



- 11 -



IDEAL ACCENTS, INC. AND SUBSIDIARIES

(A FLORIDA CORPORATION)

Miami, Florida





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





Note H -

Common Stock Transactions - continued



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



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



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



Note I -

Asset Impairment Writedown

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



|December 31,                                                      | 2005     | 2004     
|----------------------------------------------------------------- | -------- | ---------
|                                                                  |          |          
|Inventory                                                         | $ 31,156 | $ 299,137
|Fixed Assets                                                      | 9,162    | 238,225  
|Intangible Assets                                                 |        | 11,110   
|Other Assets                                                      | 4,189    | 269,649  
|                                                                  |          |          
|Total Asset Impairment Writedown (Included in Operating Expenses) | $ 44,507 | $ 818,121