Organization and Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2011

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Information – The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they are condensed and do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. The accompanying financial statements should be read in conjunction with the Company’s most recent annual financial statements included in the Company’s annual report on Form 10-K filed with the SEC on March 28, 2011. Operating results for the three and six-month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Organization and Nature of Operations – Ideal Financial Solutions, Inc. is incorporated under the laws of the State of Nevada and has three wholly-owned subsidiaries, which, with Ideal Financial Solutions, Inc., are referred to herein as the Company.

The Company markets and sells a suite of online software solutions to individuals and companies for both one-time payments as well as monthly subscription fees that enable the customers to access the Company’s software solutions online and to receive related customer support. The Company’s software includes education, support and automated online tools intended to enable customers to create additional cash resources, to reduce or eliminate non-asset-building debt and to build financial independence. The suite of software solutions is offered through the Company website and also sold as a “white label” solution to other companies who in turn, offer the services to their customers or employees. The Company initiates charges using electronic check or ACH payments to customers for the cost of the services or invoice corporate clients weekly.

Principles of Consolidation – The accompanying condensed consolidated financial statements include the operations, transactions and balances of Ideal Financial Solutions, Inc. and all of its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation.

Business Condition – During the six months ended June 30, 2011, the Company received $17,924 in cash from its operating activities. At June 30, 2011, the Company has accumulated a deficit of $8,271,230, a stockholders’ deficit of $1,018,091 and its current liabilities exceeded its current assets by $1,042,657. During the second quarter of 2010, the Company incurred a large alleged credit card fine incurred in excess of the reserves held by a merchant bank. These conditions lead our independent auditors to qualify their report dated March 25, 2011 to express substantial doubt about the Company’s ability to continue as a going concern. Management intends to mitigate these conditions by contesting claims, cutting costs, seeking out new customers and exploring new marketing opportunities. To reduce the merchant costs of fees and potential fines and penalties, during the latter half of 2010, the Company moved from credit card processing to other platforms. In addition, the Company has expanded its marketing by selling access to its software to corporate accounts rather than directly to individuals. Under these corporate accounts, the Company bills the corporations directly who then allow their employees and customers access to the suite of online services offered. Management believes that this should provide for a more stable and long-term customer base. Uncertainty as to the outcome of these efforts raises substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Revenue Recognition – One-time payment and monthly subscription fees vary and are based on the services provided to customers including access to the Company’s online software, upgraded access to the software, customer support and training. Online payments for subscription fees for each service are determined individually based on the price each service is charged to the customer and are recognized as revenue over the period the services are provided, less estimated refunds and processing fees based on historical experience rates.

Subscription fees received in advance of recognition as revenue are deferred until earned. Deferred revenue as of June 30, 2011 and December 31, 2010 were $19,344 and $153,100, respectively. Refunds and charge-backs are estimated and accrued in the same period the revenue is earned. Accrued refunds as of June 30, 2011 and December 31, 2010 were $6,445 and $47,714, respectively and are included in accrued liabilities.

In 2011, the Company began to market its software solutions to other companies, who in turn, can offer access to their employees, customers or borrowers. Ideal invoices its clients weekly for consulting services related to online marketing, online merchanting solutions, and access to Company software license and for related support services including customer service and administration.

Accounts Receivable – During the first quarter of 2011, the Company began selling its online subscription-based services to corporate customers and invoices them on a weekly basis after the services have been provided. The Company generally does not require collateral and periodically reviews accounts receivable for amounts considered uncollectible. Allowances are provided for uncollectible accounts when deemed necessary.

Earnings (Loss) Per Share –The computations of basic earnings (loss) per share are based on net income (loss) divided by the weighted-average number of common shares outstanding during the period, adjusted for qualified participating securities, using the if-converted method, when the qualified participating securities are dilutive. Diluted earnings (loss) per share are calculated by dividing net income (loss) assuming dilution by the weighted-average number of common shares and potentially dilutive shares of common stock issuable upon conversion of non-participating shares. When dilutive, the potential common shares issuable upon exercise of warrants included in diluted earnings (loss) per share are determined by the treasury stock method.

For the three and six months ended June 30, 2011, and for the three months ended June 30, 2010, there were 175,025 warrants that were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive. For the six months ended June 30, 2010, there were participating common stock equivalents from 1,000,000 shares of convertible preferred stock that are convertible into 10,000,000 shares of common stock that were excluded from the computations of basic and diluted loss per share and there were 1,175,025 warrants that were excluded from the calculation of diluted loss per share because their effects would have been anti-dilutive. The calculations of basic and diluted earnings (loss) per share were as follows:

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Net income (loss)	$	158,821	$	231,567	$	163,116	$	(215,074	)
Weighted-average common shares outstanding		22,246,661		21,923,418		22,246,661		21,923,418
Effect of participating Series A convertible preferred stock		10,000,000		10,000,000		10,000,000		-
Basic weighted-average common shares outstanding		32,246,661		31,923,418		32,246,661		21,923,418
Dilutive effect of outstanding warrants		830,065		954,322		898,947		-
Diluted weighted-average common shares outstanding		33,076,726		32,877,740		33,145,608		21,923,418
Basic earnings (loss) per share	$	-	$	0.01	$	0.01	$	(0.01	)
Diluted earnings (loss) per share	$	-	$	0.01	$	-	$	(0.01	)

Reclassifications – Certain amounts presented in the 2010 condensed consolidated financial statements have been reclassified to conform to current-period presentation. These reclassifications had no effect on net income (loss) for the three or six months ended June 30, 2010.