Organization and Summary of Significant Accounting Policies

3 Months Ended

Sep. 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 nine-month periods ended September 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 nine months ended September 30, 2011, the Company received $593,219 in cash from its operating activities. During the second quarter of 2010, the Company was notified of a purported credit card fine incurred in excess of the reserves held by a merchant bank. The Company previously reported this bogus fine on its books leading our independent auditors to issue a report dated March 25, 2011 that expressed 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 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 – The vast majority of the Company’s revenues currently come from providing various consulting services to our Customers. Customers are invoiced either weekly or monthly for the services provided during that period. Revenue is recognized upon the performance of the aforementioned services. Previously, one-time payment and monthly subscription fees vary and were 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 were determined individually based on the price each service is charged to the customer and was 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 were deferred until earned. Deferred revenue as of September 30, 2011 and December 31, 2010 were $0 and $153,100, respectively. Estimated refunds and chargebacks were estimated and accrued in the same period the revenue was earned. Accrued refunds as of September 30, 2011 and December 31, 2010 were $0 and $47,714, respectively and are included in accrued liabilities. With the diminishment of subscription revenue in favor of consulting revenue all of the Company’s revenues are now billed on a monthly basis so the Company is no longer receiving payments in advance of the services that need to be deferred. Since the Company is no longer receing payment from credit cards there is no longer a need to reserve for possible credit card chargebacks.

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. At this time the Company believes that all of its Accounts Receivable are collectible and therefore have reserved zero for bad debt. So as to assist our customers in their cash flow needs, Customers are not required to pay for a portion of such services until 180 days after being invoiced for such. We do not charge any interest or late fee on such invoices if paid within such terms.

Major Customers –During the nine months ended September 30, 2011, sales to three customers represented 41%, 37% and 13%, respectively. At September 30, 2011, these customers made up 43%, 38% and 15%, respectively, of accounts receivable.

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 nine months ended September 30, 2011, and for the three months ended September 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 nine months ended September 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 Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
Net income (loss)	$	2,425,642	$	(159,011	)	$	2,588,758	$	(371,633	)
Weighted-average common shares outstanding		22,392,566		21,923,418			22,295,827		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		32,392,566		31,923,418			32,295,827		21,923,418
Dilutive effect of outstanding warrants		928,205		-			896,700		-
Diluted weighted-average common shares outstanding		33,320,761		31,923,418			33,192,527		21,923,418
Basic earnings (loss) per share	$	0.07	$	-		$	0.08	$	(0.02	)
Diluted earnings (loss) per share	$	0.07	$	-		$	0.08	$	(0.02	)

Reclassifications – Certain amounts presented in the 2010 condensed consolidated financial statements have been reclassified to conform to current-period presentation. As of September 30, 2011, a note receivable from a shareholder was reclassified from assets to the Stockholders' Equity section of the balance sheet. Additionally, for the three and nine month period ended September 30, 2011, a reversal of an acrual of contingent liability was reclassified from merchant costs to other income. These reclassifications had no effect on net income (loss) for the three or nine months ended September 30, 2010 and 2011.