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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 ended October 31,
2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from
______________ to ________________

Commission file number 000-52452

DUSSAULT APPAREL INC.(Name
of small business issuer in its charter)

|Nevada                                                               | 98-0513727                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|8010 Melrose Avenue, Los Angeles California                          | 90046-7010                          
|(Address of principal executive offices)                             | (Zip Code)                          

Issuers telephone number (866) 841 - 2010

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

|None                | N/A                                      
|------------------- | -----------------------------------------
|Title of each class | Name of each exchange on which registered

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

Common Stock, $.001 par value(Title of
class)

Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act.[ ]

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes[X] No[ ]

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B contained in this form, and no disclosure will
  be contained, to the best of registrant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. Yes[X] No[ ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes[ ] No[X]

State issuers revenues for its most recent fiscal year:
$102,945.

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2

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days.

10,472,000 common shares @ $0.81(1)= 8,482,320

(1) average bid and asked price of such common
equity, as of February 12, 2008

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes[ ] No[ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date. 43,487,000
common shares as of February 12, 2008

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,
briefly describe them and identify the part of the Form 10-KSB (e.g., Part I,
Part II, etc.) into which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (Securities
Act). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended December
24, 1990). N/A

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

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3

PART I

|ITEM 1. | DESCRIPTION OF BUSINESS.
|------- | ------------------------

Forward LookingStatements

This annual report contains forward-looking statements as that
term is defined in Section 27A of the United States Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as may, should,
intends, expects, plans, anticipates, believes, estimates,
predicts, potential, or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, which may cause our or our industrys actual
results, levels of activity or performance to be materially different from any
future results, levels of activity or performance expressed or implied by these
forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the common shares in our capital stock. Our financial
statements are prepared in accordance with United States generally accepted
accounting principles.

As used in this annual report and unless otherwise indicated,
the terms we, us and our refer to Dussault Apparel Inc. and our
wholly-owned subsidiaries.

Corporate Overview

We were incorporated on August 1, 2006 in the State Nevada
under the name Release Your Lease Inc. The business was to create a web-based
service for buyers and sellers of leased automobiles. A decision was made by new
management, to change the corporate direction of our company to pursue
opportunities in the retail fashion industry.

On June 25, 2007, we entered in a non-binding letter of intent
with Dussault Jeans Inc., pursuant to which we will negotiate the terms of a
formal agreement for a business combination of our two companies.

Under the letter of intent, both companies have the right to
conduct due diligence on each other while we negotiate the terms of the formal
agreement. If we and Dussault Jeans Inc. have not entered into the formal
agreement by November 1, 2007, the letter of intent will terminate without
prejudice to either party.

On November 5, 2007, we entered into a revised non-binding
letter of intent with Dussault Jeans Inc., pursuant to which we will negotiate
the terms of a formal agreement for a business combination of our two companies.
The revised letter of intent replaces and supersedes our previous letter of
intent with Dussault Jeans dated June 25, 2007.

Under the letter of intent, both companies had the right to
conduct due diligence on each other while we negotiated the terms of the formal
agreement. We have not entered into a formal agreement with Dussault Jeans Inc.
and the letter of intent terminated without prejudice to either party on
November 30, 2007.

On November 5, 2007, we entered into a return to treasury
agreement with Jason Dussault, our Chief Executive Officer and a director,
pursuant to which Mr. Dussault agreed to the return and cancellation of
13,000,000 shares of our common stock currently held by him. We did not provide
Mr. Dussault with any compensation for such cancellation.

On November 8, 2007, we opened our first retail location on
Melrose Avenue, California. Our Melrose location features womens and mens
Ready-To-Wear collections as well as jewelry, luggage and headwear.

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4

Corporate History

Our company was incorporated in the State of Nevada on August
1, 2006. Effective June 11, 2007, we completed a merger with our subsidiary
Dussault Apparel Inc. As a result, we changed our name from Release Your Lease
Inc. to Dussault Apparel Inc. We changed the name of our company to better
reflect the anticipated direction and business of our company.

Effective July 11, 2007 we effected a fourteen (14) for one (1)
forward stock split of our authorized, issued and outstanding shares. As a
result, our authorized capital has increased from 75,000,000 shares of common
stock with a par value of $0.001 to 10,050,000,000 shares of common stock with a
par value of $0.001. Our issued and outstanding share capital increased from
3,060,000 shares of common stock to 49,000,000 shares of common stock.

Our common shares were quoted for trading on the OTCBB on March
14, 2007 under the symbol "RLYL". On June 11, 2007, our symbol changed to
DUSS. The address of our principal executive office is 8010 Melrose Avenue,
Los Angeles California, 90046-7010. Our telephone number is (866) 841 -
2010.

Competition

The apparel industry is intensely competitive and fragmented.
We compete against other small apparel companies, as well as large companies
that have a similar business and large marketing companies, importers and
distributors that sell products similar to or competitive with ours. Examples of
companies with whom we compete include Innovo Group Inc. (Joe's Jeans, Inc.),
Levi Strauss & Co., Giorgio Armani, Polo Ralph Lauren Corporation, Calvin
Klein, Nautica Enterprises, Guess?, Tommy Hilfiger Corp., Gap, Inc. and
Abercrombie & Fitch.

Government Regulation and Supervision

Our operations are subject to the effects of international
treaties and regulations such as the North American Free Trade Agreement
(NAFTA). We are also subject to the effects of international trade agreements
and embargoes by entities such as the World Trade Organization. Generally, these
international trade agreements benefit our business rather than burden it
because they tend to reduce trade quotas, duties, taxes and similar impositions.
However, these trade agreements may also impose restrictions that could have an
adverse impact on our business, by limiting the countries from whom we can
purchase our fabric or other component materials, or limiting the countries
where we might market and sell our products.

Labeling and advertising of our products is subject to
regulation by the Federal Trade Commission. We believe that we are in
substantial compliance with these regulations.

Research And Development

We do not currently have a formal research and development
effort but we plan to continue to develop new products.

Employees

Currently we have six employees in addition to our directors
and officers, who include Terry Fitzgerald, our President and Chief Executive
Officer, Jason Dussault, our Secretary and Treasurer, Robert Mintak, our Chief
Operating Officer, Jason Sundar, our VP Corporate Finance and Jamie Arthur
Lewin, our Chief Financial Officer. We expect to hire no new employees over the
next 12 month period as we expand into the retail fashion industry. We do and
will continue to outsource contract employment as needed.

Intellectual Property

We own and operate the following registered internet domain
names:

- www.dussaultapparel.com;

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5

- www.dussualtink.com; and
- www.dussaultcustomink.com.

We own and operate the following trademark:

- Dussault Custom Ink Trademark.

Our Products

Our principal products are the limited edition high fashion
streetwear, specifically hoodies, jeans and accessories we design, market,
distribute and sell under the Dussault Custom Ink trademark. These products are
sold in the United States and abroad to upscale retailers and boutiques. Samples
of our products can be viewed on our website located at www.Dussaultapparel.com.

We currently sell men's styles and women's styles. Dussault
Apparel products are made with high quality materials that are effected with a
variety of processes including bleaching, washing, painting and hand finishing.
Although we operate in a highly competitive market, what distinguishes the
Dussault brand is the attention to detail and the exclusivity of product.
Production runs are limited editions and in the case of our luxury leather bags
each bag is numbered. In summary, Dussault Apparel creates clothing that by its
exclusivity and limited production runs becomes an expression of a customers
individuality.

Our Dussault hoodies are inspired hand finished pieces of art,
these hoodies for men and women are lined with silk and accented with tattoo
inspired artwork on the back. Skulls, lions, flames or a bloody cleaver toting
panda give these hoodies an edge

Dussault denim offers a timeless cut and fit. Accented with
detailed hardware and back pocket stitching design, the mens denim is stylish
and durable. The mens line is available in four washes. The ladies denim line
is available in a skinny jean fit.

Dussault Apparel products can be found in every major Canadian
city, as well as New York, Los Angeles, Baltimore and Boston. Out products are
sold to fashion conscious, affluent customers who shop in high-end boutiques and
stores to customers who want to wear and be seen in the latest, trendiest
streetwear.

Customers

As we are in the development stage of our business, our vision
is to redefine the luxury experience and fulfill the lofty desires of affluent,
fashion-conscious customers worldwide. Our target market is broad as our brand
appeals to customers anywhere between the ages of 15-40. The younger clientele
appreciates the forward fashion, and trend setting edginess while our customers
in their 30s and 40s love the quality and throwback style of the old rock
generations.

Marketing

Our main method of marketing is virtual. From outrageous short
films to animations and music videos, we are constantly developing and airing
fresh branded videos on YouTube.com, Myspace.com, Facebook.com and Squidoo.com.
The virtual marketing method allows us to cost-effectively reach a wider market
on an ongoing basis.

Our products have been featured on several T.V. shows such as
Gene Simmons Family Jewels and Criss Angels Mind Freak. Family Jewels has
dedicated entire episodes to our brand, covering events and parties that weve
hosted with all of Los Angeles hottest celebrities. He also promotes us through
wearing our product while appearing on the Tom Green Show, as well as numerous
other T.V. appearances.

We also utilize street teams of Dussault followers to promote
our line in the night life club scene. Our Hoodies are being consistently
promoted through fashion shows, concerts, and industry parties.

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6

Report to Security Holders

We are not required to deliver an annual report to our
stockholders but will voluntarily send an annual report, together with our
annual audited financial statements. Any Securities and Exchange Commission
filings that we do file will be available to the public over the internet at the
Securities and Exchange Commission's website at http://www.sec.gov.

The public may read and copy any materials filed by us with the
Securities and Exchange Commission at the Securities and Exchange Commission's
Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-732-0330. We are an electronic
filer. The Securities and Exchange Commission maintains an internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Securities and Exchange
Commission. The internet address of the site is http://www.sec.gov.

RISK FACTORS

Much of the information included in this annual report includes
or is based upon estimates, projections or other forward-looking statements.
Such forward-looking statements include any projections or estimates made by us
and our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.

Such estimates, projections or other forward-looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward-looking statements.

Our common shares are considered speculative during the
development of our new business operations. Prospective investors should
consider carefully the risk factors set out below.

RISKS RELATED TO OUR BUSINESS

We have had minimal cash flows from operations and if we are
not able to obtain further financing we may be forced to scale back or cease
operations or our business operations may fail.

To date we have had minimal cash flows from operations and we
have been dependent on sales of our equity securities to meet our cash
requirements. As of October 31, 2007, we had working capital of $1,549,555. We
do not expect positive material cash flow from operations in the near term. We
have estimated that we may require up to $1,000,000 to carry out our plan in
regards to retail fashion during the twelve month period ended October 31, 2008.
However, there is no assurance that actual cash requirements will not exceed our
estimates.

We depend on third parties for significant elements of our
sales and distribution efforts. If these third parties do not continue to assist
us in our sales and distribution, our revenue could decrease, which would have
an adverse impact on our business.

We have limited marketing efforts. We depend substantially upon
third parties for several critical elements of our business including, among
other things, sales and distribution activities. There can be no assurance that
we or these third parties will be able to establish or maintain adequate sales
and distribution capabilities, that we will be able to enter into agreements or
relationships with third parties in additional territories on financially
acceptable terms or that any third parties with whom we enter into such
arrangements will be successful in selling or distributing our products. If they
are not, our business could be negatively impacted. Also, if we are unable to
maintain our relationships with these sales agents and distributors or if these
sales agents and distributors begin selling our competitors products, then our
ability to generate revenues through the sale of our products could be
negatively impacted.

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7

Changes to government regulation and supervision could have
an adverse effect on our business.

Any negative changes to international trade agreements and
regulations such as NAFTA or any agreements affecting international trade such
as those made by the World Trade Organization which result in a rise in trade
quotas, duties, taxes and similar impositions or which has the result of
limiting the countries from whom we can purchase our fabric or other component
materials, or limiting the countries where we might market and sell our
products, could have an adverse effect on our business.

Changes in trends may cause uncertainties with respect to
the growth of our company and can effect our ability to generate
revenues

Our ability to generate revenues in the future is dependent on
whether we successfully develop our products and create a marketable product and
license or otherwise commercialize our products. We cannot predict whether or
when this may happen and this causes uncertainty with respect to the growth of
our company and our ability to generate revenues.

RISKS RELATED TO OUR COMMON STOCK

Trading in our common shares on the OTC Bulletin Board is
limited and sporadic making it difficult for our shareholders to sell their
shares or liquidate their investments.

Our common shares are currently listed for public trading on
the OTC Bulletin Board. The trading price of our common shares has been subject
to wide fluctuations. Trading prices of our common shares may fluctuate in
response to a number of factors, many of which will be beyond our control. The
stock market has generally experienced extreme price and volume fluctuations
that have often been unrelated or disproportionate to the operating performance
of companies with no current business operation. There can be no assurance that
trading prices and price earnings ratios previously experienced by our common
shares will be matched or maintained. These broad market and industry factors
may adversely affect the market price of our common shares, regardless of our
operating performance.

In the past, following periods of volatility in the market
price of a companys securities, securities class-action litigation has often
been instituted. Such litigation, if instituted, could result in substantial
costs for us and a diversion of managements attention and resources.

Our stock is a penny stock. Trading of our stock may be
restricted by the SECs penny stock regulations which may limit a stockholders
ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange
Commission has adopted Rule 15g-9 which generally defines penny stock to be
any equity security that has a market price (as defined) less than $5.00 per
share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The term
accredited investor refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC which provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customers account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customers
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of

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8

broker-dealers to trade our securities. We believe that the
penny stock rules discourage investor interest in and limit the marketability of
our common stock.

FINRA sales practice requirements may also limit a
stockholders ability to buy and sell our stock and may have an adverse effect
on the market for our shares.

In addition to the penny stock rules promulgated by the
Securities and Exchange Commission, the FINRA has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customers financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the
FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.

|ITEM 2. | DESCRIPTION OF PROPERTY.
|------- | ------------------------

Our principal office is located at 8010 Melrose Avenue, Los
Angeles California, 90046-7010. The 1,500 square feet office space was leased on
March 15, 2007. The lease is renewable in five year increments and the current
lease term expires at the end of July 15, 2012. The monthly fixed rent is
$8,860. We believe that this space is sufficient to meet our present needs and
do not anticipate any difficulty in securing alternative or additional space, as
needed, on terms acceptable to us.

|ITEM 3. | LEGAL PROCEEDINGS.
|------- | ------------------

We know of no material, active, or pending legal proceeding
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation where such claim or action involves damages for
more than 10% of our current assets as of January 22, 2007. There are no
proceedings in which any of our companys directors, officers, or affiliates, or
any registered or beneficial shareholders, is an adverse party or has a material
interest adverse to our companys interest.

|ITEM 4. | SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY
      HOLDERS.
|------- | -----------------------------------------------------------

None.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS AND SMALL BUSINESS PURCHASES OF EQUITY
      SECURITIES.
|------- | --------------------------------------------------------------------------------------------------------------------

Our stock is listed for quotation on the OTC Bulletin Board
under the trading symbol DUSS. Island Stock Transfer is the registrar and
transfer agent for our common shares. Their address is 100 Second Avenue South,
Suite 104N, St. Petersburg, FL 33701, Telephone: (727) 289-0010, Facsimile:
(727) 289-0069. Our common shares initially began trading on the OTC Bulletin
Board on March 14, 2007 under the trading symbol RLYL.

The following quotations obtained from Stockwatch.com reflect
the highs and low bids for our common stock based on inter-dealer prices,
without retail mark-up, mark-down or commission an may not represent actual
transactions.

The high and low bid prices of our common stock for the periods
indicated below are as follows:

Quarter Ended
    High
    LowOctober 31, 2007
    $1.30
    $0.51July 31, 2007
    $1.50
    $1.14April 30,
      2007(1)
    N/A
    N/A


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| | (1) | Our first trade did not occur until June 18,
      2007.
| | --- | --------------------------------------------------------

On February 12, 2008, the closing price for our common stock as
reported by the quotation service operated by the OTC Bulletin Board was
$0.81.

As of February 12, 2008, there were 47 registered holders of
record of our common stock. As of such date, 43,487,000 common shares were
issued and outstanding.

Dividend Policy

We have not declared or paid any cash dividends since
inception. Although there are no restrictions that limit our ability to pay
dividends on our common shares, we intend to retain future earnings, if any, for
use in the operation and expansion of our business and do not intend to pay any
cash dividends in the foreseeable future.

Equity Compensation Plan Information

We currently do not have any stock option or equity plans.

Recent Sales of Unregistered Securities

The following sets forth certain information concerning
securities which were sold or issued by us since our inception without the
registration of these securities under the Securities Act of 1933 in reliance on
exemptions from such registration requirements.

On July 19, 2007, we issued 5,272,000 common shares to certain
officers, directors and consultants pursuant to the terms of their respective
agreements with the company. Of this amount, 1,972,000 shares will be issued to
our President, Terry Fitzgerald pursuant to the terms of a consulting agreement;
1,500,000 and 1,000,000 shares issued to Robert Mintak and Jason Sundar
respectively, pursuant to the terms of their consulting agreements; and an
additional 800,000 common shares issued collectively to three further
consultants. The shares were issued to six individuals in reliance on the
exemptions from registration provided for in Regulation S and/or Rule 506 of
Regulation D, promulgated under the Securities Act of 1933, as amended.

On September 19, 2007, we closed a private placement consisting
of 2,215,000 units of our securities at a price of $1.00 per unit for aggregate
proceeds of $2,215,000. Each unit consisted of one common share and one common
share purchase warrant, with each warrant entitling the holder, on exercise
thereof, to purchase one additional common share at a price of $1.25 at any time
until the close of business on the day which is 24 months from the date of
closing of the private placement. We issued the Units to one investor in
reliance upon the exemption from registration provided under Regulation S of the
Securities Act of 1933, as amended.

|ITEM 6. | MANAGEMENT DISCUSSION AND ANALYSIS
|------- | ----------------------------------

You should read the following discussion of our financial
condition and results of operations together with the audited financial
statements and the notes to audited financial statements included elsewhere in
this filing prepared in accordance with accounting principles generally accepted
in the United States. This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward looking statements.

We currently design, develop, manufacture, market, distribute
and sell high fashion apparel, including jeans, hoodies, luggage, jewelry and
other custom apparel. We have agreements with several premiere North American
retailers who carry our various lines.

We are a Nevada corporation with offices located at 8010
Melrose Avenue, Los Angeles California 90046-7010. We lease approximately 1,500
square feet of combined office and warehouse space located at 8010 Melrose
Avenue, Los Angeles California, at a rate of $8,860 per month. Our telephone
number is (866) 841 - 2010.

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10

General Overview

We remain an early stage company that has only recently
commenced active operations. As noted below we have only recently been
generating revenue from our retail sales. Our primary concerns in regards to our
efforts to maintain and expand our business and increase our revenues are:

- market acceptance of our products;
- our ability to successfully compete with other more established companies
  who provide similar products; and
- our short term funding requirements until we achieve a break-even level of
  operations.

While we are encouraged by the recent increases in sales and
revenues (from $Nil for the period ended October 31, 2006 to $102,945 for the
year ended October 31, 2007), we realize that in order for this trend to
continue we must establish and maintain a significant share of our target market
for the sales of our products. The only measurement that we have for
ascertaining whether or not the market is accepting our products, and whether or
not we are successfully competing in such market, is whether our revenues are
increasing on a month to month basis. As we are an early stage company, and
until we achieve a more substantial level of operations and have greater
resources available to us, it will be difficult to analyze how we are doing in
terms of our efforts to obtain additional market share and successfully compete
in the retail market, other than by looking to our revenues as a benchmark.

Until we are able to generate material revenues from operations
we must limit our expenses as much as possible. To date the majority of our
expenses have been as a result of the acquisition of inventory, start up costs
in regards to our retail operations, and stock compensation expenses due to
share issuances to certain directors, officers and employees. Once we are no
longer faced with such expenses, we anticipate that our ongoing operating
expenses will be at a manageable level, provided that we at least maintain our
current level of revenues and locate some additional financing as described
below.

Results of Operations  Year ended October 31, 2007 compared
to period from inception (August 1, 2006) to October 31, 2006

The following summary of our results of operations should be
read in conjunction with our audited financial statements for the year ended
October 31, 2007 which are included herein.

Our operating results for the year ended October 31, 2007 and
for the period from our inception on August 1, 2006 through to October 31, 2006
are summarized as follows:

Year Ended October 31, 2007
      
      Cumulative from inception (August
        1, 2006) to October 31, 2006 (Audited)Revenue
      $
      102,945
      $
      NilExpenses
      
      5,991,960
      
      2,154Salaries & Wages
      
      121,682
      
      NilStart-Up Costs
      
      5,777,175
      
      NilOther administrative Expenses
      
      65,229
      
      NilProfessional fees
      
      27,074
      
      2,000


---

11

We incurred a net loss of $5,921,650 for the year ended October
31, 2007 compared to a net loss of $2,154 for the period from inception to
October 31, 2006. The loss was primarily as a result of salaries and wages,
start up costs in regards to our retail operations, and stock compensation
expenses due to share issuances to certain directors, officers and
employees.

We recognized an increase in revenues to $102,945 for the year
ended October 31, 2007. During the period from inception to October 31, 2006, we
did not recognize any revenues. The increase in revenue was due to sales to ten
retail outlets prior to opening our retail store operation on November 5, 2007.
Our operating income was $69,510.

We experienced an increase in general and administration
expenses in the year ended October 31, 2007 to $5,991,160, as compared to
general and administration expenses for the period from inception to October 31,
2006 of $2,154. This increase was primarily due to the increased salaries and
wages, start up costs and professional fees.

As of October 31, 2007, we had a working capital of
$1,549,555.

Liquidity and Capital Resources

Our principal capital resources have been through the issuance
of common stock, although we may use shareholder loans, advances from related
parties, or borrowing in the future.

As at October 31, 2007 we had $227,256 of cash on hand. As at
October 31, 2007, our total current assets were $2,475,017, which consisted
primarily of inventory of $2,144,817, cash on hand as noted above and accounts
receivable of $102,944.

While our revenue from sales has been increasing from period to
period, there is no guarantee that this will continue, or will increase to a
sufficient level to fund our operations. However, as our revenues and cash flow
from operations increase, we look forward to relying less on the sale of stock
and advances from related parties in order to finance our operations.

As at October 31, 2007, our total current liabilities increased
to $925,426 from $Nil at October 31, 2006, primarily reflecting an increase in
subscription received.

We do not anticipate any material changes in the cost or
requirements relating to the capital resources required to conduct our
operations. We do not have any obligations regarding, and do not intend on
making, any material capital expenditures.

Historically, we have financed our cash flow and operations
from the sale of stock and advances from shareholders. Subsequent to the year
ended October 31, 2007, we effected equity private placements totaling
$2,215,000, and have cash on hand of $227,256. These funds will not be
sufficient for us to address our minimum current and ongoing expenses, and as a
result we may have to restrict or eliminate expenses associated with the
marketing and promotion activity connected with the development and marketing of
our products and expansion of our retail operations. However, we cannot satisfy
our minimum cash requirements for the year ending October 31, 2008 without
further funding. As we will require additional monies during 2008, we hope to
raise any such additional capital primarily through the private placement of our
securities or advances from related parties.

For the year ended October 31, 2007, we incurred operating
expenses of $5,991,160.

---

12

We have no external sources of liquidity in the form of credit
lines from banks. Based on our future operations described below, management
believes that our available cash will not be sufficient to fund our working
capital requirements in the near future and therefore, we will have to raise
financing through the sale of our equity securities or arrange an advance from
shareholders of our company.

Cash Requirements

We anticipate that we will require up to $830,000 for the 12
months ending October 31, 2008 to implement our expansion plans. Specifically,
we estimate our operating expenses and working capital requirements for the next
12 months to be as follows:

Estimated Funding Required During the Twelve
      Month Period Ending October 31, 2008Design and Development Activities
    $
    60,000Officer and Employee Compensation
    
    500,000Sales and Marketing
    
    140,000Legal, Accounting and Professional Fees
    
    40,000General and Administrative
    
    90,000Total
    $
    830,000


There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, if and when it is needed, we will be forced to
scale down or perhaps even cease the operation of our business.

Future Operations

Immediate Objectives

Our primary objective in the next twelve months will be to
further develop and expand our retail store locations and increase sales in such
locations as they open.

Going Concern

We have suffered recurring losses from operations. The
continuation of our company as a going concern is dependent upon our company
attaining and maintaining profitable operations and raising additional capital.
The financial statements do not include any adjustment relating to the recovery
and classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue
operations.

Future Operations

Presently, our revenues are not sufficient to meet our
operating and capital expenses. Management projects that we will require
additional funding to maintain and expand our current operations.

Our capital requirements are difficult to plan in light of our
current strategy to expand our customer base and retail operations for our
products. Since our inception, we have been dependent on investment capital as
an important source of liquidity. Our operations presently are generating
negative cash flow, and we do not expect positive cash flow from operations in
the near term. We need to secure additional working capital in the short-term in
order to sustain our operations and execute our business plan. It is our
intention to raise sufficient funds necessary to carry our company through to
positive cash flow and profitability. We have incurred operating losses since
inception, and this is likely to continue into the year ended October 31,
2008.

Due to the uncertainty of our ability to meet our current
operating and capital expenses, in their report on the annual financial
statements for the year ended October 31, 2007, our independent auditors
included an explanatory

---

13

paragraph regarding concerns about our ability to continue as a
going concern. Our financial statements contain additional note disclosures
describing the circumstances that lead to this disclosure by our independent
auditors.

An investment in our common stock involves a number of very
significant risks. You should carefully consider the risks and uncertainties in
addition to other information in this information statement in evaluating our
company and our business. It is possible that our business, operating results
and financial condition could be seriously harmed due to any of the risks
disclosed herein. As a result of any of these risks you could lose all or part
of your investment.

As a result, there will also be substantial doubt about our
ability to continue as a going concern as the continuation of its business will
be dependent upon obtaining further financing, successful and sufficient market
acceptance of the automated photo products, the continuing successful
development of our products and retail operations, and, finally, achieving a
profitable level of operations. The issuance of additional equity securities by
us could result in a significant dilution in the equity interests of the
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further
funds required for its continued operations. We intend to pursue various
financing alternatives to meet its immediate and long-term financial
requirements, which it anticipates will consist of further private placements of
its equity securities or shareholder loans. There can be no assurance that
additional financing will be available to us when needed or, if available, that
it can be obtained on commercially reasonable terms. If we are not able to
obtain the additional financing on a timely basis, we will not be able to meet
our obligations as they become due and we will be forced to scale down or
perhaps even cease operations.

Management believes that our products will become increasingly
popular in our targeted market segment and that if we are successful at building
our brand and showing consistent sales growth that we may be successful at
completing future equity or debt financings.

We are pursuing various financing alternatives to meet our
immediate and long-term financial requirements, which we anticipate will consist
of further private placements of equity securities, advances from related
parties or shareholder loans. We plan to rely on loans from management to meet
our short term cash requirements. We have not entered into any definitive
agreements with any shareholders or related parties for the provision of loans
or advances. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, or generate significant material revenues from
operations, we will not be able to meet our other obligations as they become due
and we will be forced to scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

Our company has no outstanding derivative financial
instruments, off-balance sheet guarantees, interest rate swap transactions or
foreign currency contracts. Neither our company nor our operating subsidiaries
engage in trading activities involving non-exchange traded contracts.

CRITICAL ACCOUNTING POLICIES

Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles used in the United
States. Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our consolidated financial statements is critical to an understanding of our
financials.

Income Taxes

We utilizes SFAS No. 109, Accounting for Income Taxes, which
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements

---

14

or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the tax basis of
assets and liabilities and their financial reporting amounts based on enacted
tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. We generated deferred tax credits through net operating
loss carryforwards. However, a valuation allowance of 100% has been established,
as the realization of the deferred tax credits is not reasonably certain, based
on going concern considerations outlined below.

Development-Stage Company

We are considered a development-stage company, with limited
operating revenues during the periods presented, as defined by Statement of
Financial Accounting Standards (SFAS) No. 7. SFAS. No. 7 requires companies to
report their operations, shareholders deficit and cash flows since inception
through the date that revenues are generated from managements intended
operations, among other things. Management has defined inception as August 1,
2006. Since inception, We have incurred operating losses totaling $5,923,804.
Our working capital has been generated through the sales of common stock.
Management has provided financial data since August 1, 2006 Inception in the
financial statements, as a means to provide readers of our financial information
to make informed investment decisions.

Restatement

The balance sheet as at October 31, 2006 and statement of
operations for the period August 1, 2006 (date of inception) to October 31, 2006
were restated to reflect a fourteen (14) for one (1) forward stock split of
authorized, issued and outstanding common stock on June 11, 2007. Elements of
the financial statements restated were Common Stock, Additional Paid-In Capital,
Earnings per Share and Weighted Average shares outstanding, basic and diluted.
Total stockholders equity and net loss remained unchanged.

Accounts Receivable

We shipped inventory at wholesale prices to ten retail outlets
in October of 2007 totaling $102,944. Payment terms varied. As at October 31,
2007 none of the terms had expired, and no collections had been made. An
accounting policy for allowance for doubtful accounts has not been established
because of insufficient experience. Customers were qualified by management from
prior business arrangements, and management expects the full amount of $102,944
will be collected in the following year.

Inventory

Inventories are stated at the lower of cost or market value.
Market value represents net realizable value. Inventories are priced by the
Retail Inventory (average cost) method. A perpetual inventory system is
maintained.

Property and Equipment

Fixtures and equipment are stated at cost less accumulated
depreciation. Major additions, betterment and rental improvements during the
construction phase of the retail store April through October 2007 are
capitalized. Maintenance and repairs are expensed currently. Fixtures and
equipment including leasehold improvements totaling $68,640 were installed in a
leased retail store following possession in March, 2007. As at October 31, 2007
the store had not commenced operations. These assets were not in service and
thus not depreciated during the year.

Startup Costs

Startup costs of $5,777,175 were incurred in preparation for
the opening of a retail store, reported in Note 6, Subsequent Events. Costs
included preparation for a grand opening and consulting costs. Cost of fixtures
and equipment was capitalized.

---

15

Loss Per Share

Net loss per share is calculated in accordance with SFAS 128,
Earnings Per Share, for the periods presented. Basic net loss per share is based
upon the weighted average number of common shares outstanding. Diluted net loss
per share is based on the assumption that all dilutive convertible shares and
stock options were converted or exercised. We has no potentially dilutive
securities as of October 31, 2007.

On June 11, 2007 a forward stock split of Common Stock occurred
on a 14 for 1 basis. The loss per share for the periods presented has been
calculated accordingly, giving retroactive effect to the forward stock
split.

The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for the
period ended October 31, 2006 and year ended October 31, 2007:

|                                         |   | 2006       |   |   | 2007       |  
|---------------------------------------- | - | ---------- | - | - | ---------- | -
|Basic and diluted net loss per share:    |   |            |   |   |            |  
|Numerator                                |   |            |   |   |            |  
|Net (Loss)                               | $ | (2,154     | ) | $ | (5,921,650 | )
|                                         |   |            |   |   |            |  
|Denominator                              |   |            |   |   |            |  
|Basic and
      diluted weighted average |   |            |   |   |            |  
|number of shares outstanding             |   | 14,479,346 |   |   | 50,126,595 |  
|                                         |   |            |   |   |            |  
|Basic and Diluted Net Loss Per Share     | $ | (0.00      | ) | $ | (0.12      | )

|ITEM 7. | FINANCIAL STATEMENTS.
|------- | ---------------------

|The following consolidated
      financial statements and the notes thereto are filed as part of this
      annual report: |   
|-------------------------------------------------------------------------------------------------------------------------- | --
|                                                                                                                           |   
|Report
      of Independent Registered Public Accounting Firm dated January 28, 2008;                                      | 16
|                                                                                                                           |   
|Balance
      Sheets at October 31, 2007 and 2006;                                                                         | 17
|                                                                                                                           |   
|Statements
      of Operations for the years ended October 31, 2007 and 2006;                                              | 18
|                                                                                                                           |   
|Statements
      of Cash Flows for the years ended October 31, 2007 and 2006;                                              | 19
|                                                                                                                           |   
|Statements
      of Stockholders Equity for the period from August 1, 2006 (inception) to
      October 31, 2007; and      | 20
|                                                                                                                           |   
|Notes
      to the Financial Statements.                                                                                   | 21

---

16

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To: The Board of Directors and Shareholders Dussault
Apparel Inc.Vancouver, B.C., Canada

I have audited the accompanying balance sheet of Dussault
Apparel Inc. as of October 31, 2007 and 2006 and the related statements of
operations, of shareholders equity (deficit) and of cash flows for the year
ended October 31, 2007 and the period August 1, 2006 (date of inception) through
October 31, 2006. These financial statements are the responsibility of the
Companys management. My responsibility is to express an opinion on these
financial statements based on my audit.

I conducted my audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that I 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. I believe that my
audit provides a reasonable basis for my opinion.

In my opinion, based on my audit, the financial statements
referred to above present fairly, in all material respects, the financial
position of Dussault Apparel Inc as of October 31, 2007 and 2006 and the results
of its operations and its cash flows for the year ended October 31, 2007 and the
period August 1, 2006 (date of inception) through October 31, 2006 in conformity
with United States generally accepted accounting principles.

The Companys financial statements are prepared using
accounting principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The Company as at
October 31, 2007 had not established an ongoing source of revenues sufficient to
cover its operating costs and to allow it to continue as a going concern. The
Company subsequently opened its planned retail outlet, per Note 6 to these
financial statements, however the ability of the Company to continue as a going
concern is dependent on the successful stimulation of sales in order to fund
operating losses and become profitable. If the Company is unable to make it
profitable, the Company could be forced to cease development of operations.
Management cannot provide any assurances that the Company will be successful in
its retail operation. The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern

John Kinross-Kennedy Certified Public Accountant
Irvine, California

January 28, 2008

---

|17                           
|-----------------------------
|                             
|                             
|DUSSAULT APPAREL INC.        
|(A Development Stage Company)
|Balance Sheet                
|October 31,                  

|                                                       |   | 2006       |   |   | 2007       |  
|------------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                       |   | (Restated) |   |   |            |  
|ASSETS                                                 |   |            |   |   |            |  
|Current
      Assets                                   |   |            |   |   |            |  
|Cash                                                   | $ | 43,846     |   | $ | 227,256    |  
|Accounts Receivable                                    |   | -          |   |   | 102,944    |  
|Inventory                                              |   | -          |   |   | 2,144,817  |  
|                                                       |   |            |   |   |            |  
|Total Current
      Assets                             |   | 43,846     |   |   | 2,475,017  |  
|                                                       |   |            |   |   |            |  
|FIXED ASSETS                                           |   |            |   |   |            |  
|Property
      and Equipment                           |   | -          |   |   | 68,641     |  
|                                                       |   |            |   |   |            |  
|                                                       |   | -          |   |   | 68,641     |  
|                                                       |   |            |   |   |            |  
|Total Assets                                           | $ | 43,846     |   | $ | 2,543,658  |  
|                                                       |   |            |   |   |            |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                   |   |            |   |   |            |  
|Current Liabilities                                    |   |            |   |   |            |  
|Accounts Payable                                       | $ | -          |   | $ | 889        |  
|Subscription
      Received                            |   | -          |   |   | 924,573    |  
|                                                       |   |            |   |   |            |  
|Total Current
      Liabilities                        |   | -          |   |   | 925,462    |  
|                                                       |   |            |   |   |            |  
|Total Liabilities                                      |   | -          |   |   | 925,462    |  
|                                                       |   |            |   |   |            |  
|Shareholders' Equity                                   |   |            |   |   |            |  
|Common Stock, $0.001 par value;
      authorized       |   |            |   |   |            |  
|75,000,000 shares; issued
      and outstanding        |   |            |   |   |            |  
|56,487,000 shares                                      |   | 42,700     |   |   | 56,487     |  
|Additional Paid-In
      Capital                       |   | 3,300      |   |   | 7,485,513  |  
|Deficit accumulated during the
      development stage |   | (2,154     | ) |   | (5,923,804 | )
|                                                       |   |            |   |   |            |  
|Total Shareholders' Equity                             |   | 43,846     |   |   | 1,618,196  |  
|                                                       |   |            |   |   |            |  
|Total Liabilities and Shareholders'
      Equity       | $ | 43,846     |   | $ | 2,543,658  |  

(The accompanying notes are an integral part of these financial
statements)

---

|18                           
|-----------------------------
|                             
|                             
|DUSSAULT APPAREL INC.        
|(A Development Stage Company)
|Statement of Operations      

|                                           |   | For the period |   |   |               |   |   |              |   |   | For the period |  
|------------------------------------------ | - | -------------- | - | - | ------------- | - | - | ------------ | - | - | -------------- | -
|                                           |   | from Aug. 1    |   |   |               |   |   |              |   |   | from Aug. 1    |  
|                                           |   | 2006           |   |   | For the three |   |   | For the year |   |   | 2006           |  
|                                           |   | (date of       |   |   |               |   |   |              |   |   | (date of       |  
|                                           |   | inception)     |   |   | months ended  |   |   | ended        |   |   | inception)     |  
|                                           |   | to October 31, |   |   | October 31,   |   |   | October 31,  |   |   | to October     |  
|                                           |   | 2006           |   |   | 2007          |   |   | 2007         |   |   | 31, 2007       |  
|                                           |   | (Restated)     |   |   |               |   |   |              |   |   |                |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Revenue                                    | $ | -              |   | $ | 102,945       |   | $ | 102,945      |   | $ | 102,945        |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Cost of Sales                              |   |                |   |   | 33,435        |   |   | 33,435       |   |   | 33,435         |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Operating Income                           |   | -              |   |   | 69,510        |   |   | 69,510       |   |   | 69,510         |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|General and Administrative
      Expenses: |   |                |   |   |               |   |   |              |   |  
|Salaries & Wages                           |   |                |   |   | 117,932       |   |   | 121,682      |   |   | 121,682        |  
|Professional Fees                          |   | 2,000          |   |   | 1,673         |   |   | 27,074       |   |   | 29,074         |  
|Start-Up Costs                             |   |                |   |   | 5,777,175     |   |   | 5,777,175    |   |   | 5,777,175      |  
|Other Admin. Expenses                      |   | 154            |   |   | 572           |   |   | 65,229       |   |   | 65,383         |  
|Total General and                          |   |                |   |   |               |   |   |              |   |   |                |  
|Administrative                             |   |                |   |   |               |   |   |              |   |   |                |  
|Expenses                                   |   | 2,154          |   |   | 5,897,352     |   |   | 5,991,160    |   |   | 5,993,314      |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Net Loss                                   | $ | (2,154         | ) | $ | (5,827,842    | ) | $ | (5,921,650   | ) | $ | (5,923,804     | )
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Loss Per Common Share:                     |   |                |   |   |               |   |   |              |   |   |                |  
|Basic and diluted                          | $ | -              |   | $ | (0.11         | ) | $ | (0.12        | ) |   |                |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|                                           |   |                |   |   |               |   |   |              |   |   |                |  
|Weighted Average Shares                    |   |                |   |   |               |   |   |              |   |   |                |  
|Outstanding basic and                      |   |                |   |   |               |   |   |              |   |   |                |  
|diluted                                    |   | 14,479,346     |   |   | 53,964,207    |   |   | 50,126,595   |   |   |                |  

(The accompanying notes are an integral part of these financial
statements)

---

|19                           
|-----------------------------
|                             
|                             
|DUSSAULT APPAREL INC.        
|(A Development Stage Company)
|Statement of Cash Flows      

|                                                    |   |                     |          |   |                |          |   |                |          |   | For the       |  
|--------------------------------------------------- | - | ------------------- | -------- | - | -------------- | -------- | - | -------------- | -------- | - | ------------- | -
|                                                    |   | For the             |          |   |                |          |   |                |          |   | period from   |  
|                                                    |   | period              |          |   |                |          |   |                |          |   | Aug. 1,       |  
|                                                    |   | from Aug. 1,        |          |   | For the three  |          |   |                |          |   | 2006(date     |  
|                                                    |   | 2006(date of        |          |   | months         |          |   | For the year   |          |   | of inception) |  
|                                                    |   | inception) to       |          |   | ended Oct.     |          |   | ended Oct.     |          |   | to Oct. 31,   |  
|                                                    |   | Oct.
      31, 2006 |          |   | 31,
      2007 |          |   | 31,
      2007 |          |   | 2007          |  
|Cash flows from operating activities:               |   |                     |          |   |                |          |   |                |          |   |               |  
|Net loss                                            | $ | (2,154              | )        | $ | (5,827,842     | )        | $ | (5,921,650     | )        | $ | (5,923,804    | )
|Adjustments
      to reconcile net loss to net cash |   |                     |          |   |                |          |   |                |          |  
|used by operating
      activities:                 |   |                     |          |   |                |          |   |                |          |   |               |  
|Change in operating
      assets and liabilities:   |   |                     |          |   |                |          |   |                |          |   |               |  
|(Increase)/Decrease in Accounts Receivable          |   |                     | (102,944 | ) |                | (102,944 | ) |                | (102,944 | )
|(Increase)/Decrease in Inventory                    |   |                     |          |   | (839,741       | )        |   | (2,144,817     | )        |   | (2,144,817    | )
|Increase
      (Decrease) in accounts payable       |   |                     |          |   |                |          |   |                |          |  
|and accrued liabilities                             |   |                     |          |   | (14,440        | )        |   | 889            |          |   | 889           |  
|Non cash issue of stock for services                |   |                     |          |   | 5,272,000      |          |   | 5,272,000      |          |   | 5,272,000     |  
|Net cash (used by) operating                        |   |                     |          |   |                |          |   |                |          |   |               |  
|activities                                          |   | (2,154              | )        |   | (1,512,967     | )        |   | (2,896,522     | )        |   | (2,898,676    | )
|                                                    |   |                     |          |   |                |          |   |                |          |   |               |  
|Cash flows from investing activities                |   |                     |          |   |                |          |   |                |          |   |               |  
|Purchase of property
      and equipment            |   | 0                   |          |   | (68,641        | )        |   | (68,641        | )        |   | (68,641       | )
|Net cash (used by) investing                        |   |                     |          |   |                |          |   |                |          |   |               |  
|activities                                          |   | 0                   |          |   | (68,641        | )        |   | (68,641        | )        |   | (68,641       | )
|                                                    |   |                     |          |   |                |          |   |                |          |   |               |  
|Cash flows from financing activities:               |   |                     |          |   |                |          |   |                |          |   |               |  
|Subscriptions received/(converted to                |   |                     |          |   |                |          |   |                |          |   |               |  
|stock)                                              |   |                     |          |   | (553,652       | )        |   | 924,573        |          |   | 924,573       |  
|Common stock issued for cash                        |   | 46,000              |          |   | 2,215,000      |          |   | 2,224,000      |          |   | 2,270,000     |  
|Net cash (used by) provided by                      |   |                     |          |   |                |          |   |                |          |   |               |  
|financing activities                                |   | 46,000              |          |   | 1,661,348      |          |   | 3,148,573      |          |   | 3,194,573     |  
|                                                    |   |                     |          |   |                |          |   |                |          |   | `             |  
|Net increase (decrease) in cash                     |   | 43,846              |          |   | 79,740         |          |   | 183,410        |          |   | 227,256       |  
|                                                    |   |                     |          |   |                |          |   |                |          |   |               |  
|Cash, beginning of the period                       |   | 0                   |          |   | 147,516        |          |   | 43,846         |          |   | -             |  
|Cash, end of the period                             | $ | 43,846              |          | $ | 227,256        |          | $ | 227,256        |          | $ | 227,256       |  
|Supplemental cash flow disclosure:                  |   |                     |          |   |                |          |   |                |          |   |               |  
|Interest paid                                       | $ | -                   |          | $ | -              |          | $ | -              |          | $ | -             |  
|Taxes paid                                          | $ | -                   |          | $ | -              |          | $ | -              |          | $ | -             |  

(The accompanying notes are an integral part of these financial
statements)

---

|20                               
|---------------------------------
|                                 
|                                 
|DUSSAULT APPAREL INC.            
|(A Development Stage Company)    
|Statement of Shareholders' Equity
|(Unaudited)                      

|                                                        |  |              |  |   |            |  |   |            |   |   | Deficit       |   |   |            |  
|------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | ---------- | - | - | ------------- | - | - | ---------- | -
|                                                        |  |              |  |   |            |  |   |            |   |   | Accumulated   |   |   | Total      |  
|                                                        |  | Common Stock |  |   | Additional |  |   | during the |   |   | Shareholders' |  
|                                                        |  | Number of    |  |   |            |  |   | Paid-In    |   |   | Development   |   |   | Equity     |  
|                                                        |  | Shares       |  |   | Amount     |  |   | Capital    |   |   | Stage         |   |   | (Deficit)  |  
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|Inception: August 1, 2006                               |  | -            |  | $ | -          |  | $ | -          |   | $ | -             |   | $ | -          |  
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|Aug. 31, 2006: issued stock for cash at
      $0.02 per |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|share                                                   |  | 1,500,000    |  |   | 1,500      |  |   | 13,500     |   |   |               |   |   | 15,000     |  
|Oct 31, 2006: issued stock for cash at
      $0.02 per  |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|share                                                   |  | 1,550,000    |  |   | 1,550      |  |   | 29,450     |   |   |               |   |   | 31,000     |  
|Net loss for period January 12 - October
      31, 2006 |  |              |  |   |            |  |   |            |   |   | (2,154        | ) |   | (2,154     | )
|Balance, October 31, 2006                               |  | 3,050,000    |  | $ | 3,050      |  | $ | 42,950     |   | $ | (2,154        | ) | $ | 43,846     |  
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|Nov. 8, 2006: issued stock for cash at $0.02 per        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|share                                                   |  | 450,000      |  |   | 450        |  |   | 8,550      |   |   |               |   |   | 9,000      |  
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|Balances before 14 for 1 forward common
      stock     |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|split                                                   |  | 3,500,000    |  |   | 3,500      |  |   | 51,500     |   |   | (2,154        | ) |   | 52,846     |  
|Jun 11, 2007: 14 for 1 forward common stock
      split |  | 45,500,000   |  |   | 45,500     |  |   | (45,500    | ) |   |               |   |   | -          |  
|Balances after 14 for 1 forward common stock split      |  | 49,000,000   |  |   | 49,000     |  |   | 6,000      |   |   | (2,154        | ) |   | 52,846     |  
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|July 19, 2007 issued stock for services at $1.00 per    |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|sh                                                      |  | 5,272,000    |  |   | 5,272      |  |   | 5,266,728  |   |   |               |   |   | 5,272,000  |  
|Sep. 19, 2007 issued stock for cash at $1.00 per        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|share                                                   |  | 2,215,000    |  |   | 2,215      |  |   | 2,212,785  |   |   |               |   |   | 2,215,000  |  
|Net loss for year ended October 31, 2007                |  |              |  |   |            |  |   |            |   |   | (5,921,650    | ) |   | (5,921,650 | )
|                                                        |  |              |  |   |            |  |   |            |   |   |               |   |   |            |  
|Balances at October 31, 2007                            |  | 56,487,000   |  | $ | 56,487     |  | $ | 7,485,513  |   |   | ($5,923,804   | ) | $ | 1,618,196  |  

(The accompanying notes are an integral part of these financial
statements)

---

21

|DUSSAULT APPAREL INC.            
|---------------------------------
|(A Development Stage Company)    
|NOTES TO THE FINANCIAL STATEMENTS
|October 31, 2007                 

NOTE 1  BASIS OF PRESENTATION

These financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America
and with the instructions to Form 10-KSB as promulgated by the Securities and
Exchange Commission (SEC).

These financial statements include all adjustments that in the
opinion of management are necessary to present fairly the financial position,
results of operations and cash flows for the year ended October 31, 2007. All
adjustments are of a normal recurring nature.

Use of Estimates

The preparation of financial statements in accordance with
generally accepted accounting principles in the United States of America
requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities known
to exist as of the date the financial statements are published, and the reported
amounts of revenues and expenses during the reporting period. Uncertainties with
respect to such estimates and assumptions are inherent in the preparation of the
Companys financial statements; accordingly, it is possible that the actual
results could differ from these estimates and assumptions and could have a
material effect on the reported amounts of the Companys financial position and
results of operations.

NOTE 2  OPERATIONS

The financial statements presented are those of Dussault
Apparel Inc. (the Company). The Company was incorporated under the laws of the
State of Nevada on August 1, 2006 as Release Your Lease Inc. In May, 2007
control of the company changed as a result of a stock transaction wherein Mark
Hammer sold 1,500,000 common shares of his capital stock to Jason Dussault. On
May 10, 2007 Mark Hammer was replaced as President , CEO, CFO, Secretary and
Treasurer by Jason Dussault. Mark Hammer resigned as Director and Jason Dussault
joined the Board as a Director.

On June 11, 2007 the Company, at that time named Release Your
Lease, Inc., effected a reverse forward merger with Dussault Apparel Inc, a
Nevada shell company. Release Your Lease Inc. survived the merger and the name
was changed to Dussault Apparel, Inc. The Company became oriented toward the
retail clothing business.

Income Taxes

The Company utilizes SFAS No. 109, Accounting for Income
Taxes, which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in
the financial statements or tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the tax basis of
assets and liabilities and their financial reporting amounts based on enacted
tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized. The Company generated deferred tax credits through net
operating loss carryforwards. However, a valuation allowance of 100% has been

---

22

established, as the realization of the deferred tax credits is
not reasonably certain, based on going concern considerations outlined
below.

Going Concern

The Companys financial statements are prepared using
accounting principles generally accepted in the United States of America
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The Company as at
October 31, 2007 had not established an ongoing source of revenues sufficient to
cover its operating costs and to allow it to continue as a going concern. The
Company subsequently opened its planned retail outlet, per Note 6, however the
ability of the Company to continue as a going concern is dependent on the
successful stimulation of sales in order to fund operating losses and become
profitable. If the Company is unable to make it profitable, the Company could be
forced to cease development of operations. Management cannot provide any
assurances that the Company will be successful in its retail operation. The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.

Development-Stage Company

The Company is considered a development-stage company, with
limited operating revenues during the periods presented, as defined by Statement
of Financial Accounting Standards (SFAS) No. 7. SFAS. No. 7 requires companies
to report their operations, shareholders deficit and cash flows since inception
through the date that revenues are generated from managements intended
operations, among other things. Management has defined inception as August 1,
2006. Since inception, the Company has incurred operating losses totaling
$5,923,804. The Companys working capital has been generated through the sales
of common stock. Management has provided financial data since August 1, 2006
Inception in the financial statements, as a means to provide readers of the
Companys financial information to make informed investment decisions.

Restatement

The balance sheet as at October 31, 2006 and statement of
operations for the period August 1, 2006 (date of inception) to October 31, 2006
were restated to reflect a fourteen (14) for one (1) forward stock split of
authorized, issued and outstanding common stock on June 11, 2007. Elements of
the financial statements restated were Common Stock, Additional Paid-In Capital,
Earnings per Share and Weighted Average shares outstanding, basic and diluted.
Total stockholders equity and net loss remained unchanged.

Accounts Receivable

The company shipped inventory at wholesale prices to ten retail
outlets in October of 2007 totaling $102,944. Payment terms varied. As at
October 31, 2007 none of the terms had expired, and no collections had been
made. An accounting policy for allowance for doubtful accounts has not been
established because of insufficient experience. Customers were qualified by
management from prior business arrangements, and management expects the full
amount of $102,944 will be collected in the following year.

Inventory

Inventories are stated at the lower of cost or market value.
Market value represents net realizable value. Inventories are priced by the
Retail Inventory (average cost) method. A perpetual inventory system is
maintained.

---

23

Property and Equipment

Fixtures and equipment are stated at cost less accumulated
depreciation. Major additions, betterment and rental improvements during the
construction phase of the retail store April through October 2007 are
capitalized. Maintenance and repairs are expensed currently. Fixtures and
equipment including leasehold improvements totaling $68,640 were installed in a
leased retail store following possession in March, 2007. As at October 31, 2007
the store had not commenced operations. These assets were not in service and
thus not depreciated during the year.

Startup Costs

Startup costs of $5,777,175 were incurred in preparation for
the opening of a retail store, reported in Note 6, Subsequent Events. Costs
included preparation for a grand opening and consulting costs. Cost of fixtures
and equipment was capitalized.

Loss Per Share

Net loss per share is calculated in accordance with SFAS 128,
Earnings Per Share, for the periods presented. Basic net loss per share is based
upon the weighted average number of common shares outstanding. Diluted net loss
per share is based on the assumption that all dilutive convertible shares and
stock options were converted or exercised. The Company has no potentially
dilutive securities as of October 31, 2007.

On June 11, 2007 a forward stock split of Common Stock occurred
on a 14 for 1 basis. The loss per share for the periods presented has been
calculated accordingly, giving retroactive effect to the forward stock
split.

The following is a reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations for the
period ended October 31, 2006 and year ended October 31, 2007:

|                                      |   | 2006       |   |   | 2007       |  
|------------------------------------- | - | ---------- | - | - | ---------- | -
|Basic and diluted net loss per share: |   |            |   |   |            |  
|Numerator                             |   |            |   |   |            |  
|Net (Loss)                            | $ | (2,154     | ) | $ | (5,921,650 | )
|                                      |   |            |   |   |            |  
|Denominator                           |   |            |   |   |            |  
|Basic and diluted weighted average    |   |            |   |   |            |  
|number of shares outstanding          |   | 14,479,346 |   |   | 50,126,595 |  
|                                      |   |            |   |   |            |  
|Basic and Diluted Net Loss Per Share  | $ | (0.00      | ) | $ | (0.12      | )

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No.123 (revised 2004),
"Share-Based Payment". Statement 123(R) will provide investors and other users
of financial statements with more complete and neutral financial information by
requiring that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments issued. Statement
123(R) covers a wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. Statement 123(R)
replaces FASB Statement No.

---

24

123, Accounting for Stock-Based Compensation, and supersedes
APB Opinion No. 25, Accounting for Stock Issued to Employees. Statement 123, as
originally issued in 1995, established as preferable a fair-value-based method
of accounting for share-based payment transactions with employees. However, that
Statement permitted entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
Public entities (other than those filing as small business issuers) were
required to apply Statement 123(R) as of the first interim or annual reporting
period that began after June 15, 2005.

In March 2005, the SEC released Staff Accounting Bulletin No.
107, Share-Based Payment (SAB 107), which provided interpretive guidance
related to the interaction between SFAS 123(R) and certain SEC rules and
regulations. It also provided the SEC staffs views regarding valuation of
share-based payment arrangements. In April 2005, the SEC amended the compliance
dates for SFAS 123(R), to allow companies to implement the standard at the
beginning of their next fiscal year, instead of the next reporting period
beginning after June 15, 2005. Management adopted SFAS 123(R) at inception
August 1, 2006.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

There were no contingent liabilities as at October 31,
2007.

A property lease was entered into March 7, 2007 by the
principals of the Company on behalf of the Company for a retail store at 8010
Melrose Avenue, Los Angeles, California: The terms of the lease call for a five
year lease beginning March 15, 2007 at a flat rate of $8,860 per month, and
ending July 15, 2012. Rent for April, May, June, and July 2007 was abated. This
was during the construction period of improvements to a retail store. The lease
provides for an option to renew for five years at a re-negotiated rent.

Future minimum lease payments required under the lease at
October 31, 2007 are as follows, for fiscal years ending October 31:

2008
    $
    106,3202009
    
    106,3202010
    
    106,3202011
    
    106,3202012
    
    82,620Total minimum lease payments
    $
    507,900


NOTE 4  CAPITAL STRUCTURE

Common Stock Transactions during the period from inception
August 1, 2006 through October 31, 2007

On August 31, 2006, the company issued 1,500,000 shares of its
common stock to a single investor at a price of $0.01 per share for a total of
$15,000.

On October 31, 2006 the Company issued a total of 1,550,000
shares of its common stock to 27 investors. The shares were sold at $0.02 for a
total of $31,000.

As of October 31, 2005, the Company had authorized 75,000,000
of $0.001 par common stock, of which 3,050,000 shares were issued and
outstanding.

---

25

On November 8, 2006, the Company issued a total of 450,000
shares of its common stock to 5 investors. The shares were sold at $0.02
realizing $9,000.

On June 11, 2007 a fourteen (14) for one (1) forward stock
split was effected of authorized, issued and outstanding common stock.
Authorized capital was increased from 75,000,000 shares to 1,050,000,000 shares.
Issued and outstanding capital was increased from 3,060,000 to 42,840,000
shares. Par value of $0.001 per common share remained the same.

On August 31, 2007, the Company issued a total of 5,272,000
shares of common stock at a price of $1.00 per share for consultants fees
valued at $5,272,000.

On August 31, 2007, the Company issued 2,215,000 shares of
common stock for cash at a price of $1.00 per share, realizing $2,215,000 before
fees.

As of October 31, 2007 the Company had authorized 75,000,000
shares of $0.001 par value common stock, of which 56,487,000 shares were issued
and outstanding.

NOTE 5  LITIGATION

There were no legal proceedings against the Company with
respect to matters arising in the ordinary course of business.

NOTE 6  SUBSEQUENT EVENT

On November 7, 2007 the Company opened its planned retail
outlet Dussault Motel on Melrose Avenue in Los Angeles. The store was fully
stocked and functional following a grand opening.

---

26

|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------------

None.

|ITEM 8A. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

As required by Rule 13a-15 under the Securities Exchange Act of
1934, as of the end of the period covered by this annual report, being October
31, 2007, we have carried out an evaluation of the effectiveness of the design
and operation of our companys disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
our companys management, including our companys principal executive officer
and our principal financial officer. Based upon that evaluation, our companys
principal executive officer and our principal financial officer concluded that
our companys disclosure controls and procedures are effective as at the end of
the period covered by this report. There have been no changes in our companys
internal controls or in other factors, which could affect internal control
subsequent to the date we carried out our evaluation.

Disclosure controls and procedures and other procedures that
are designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commissions rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management
including our Chief Executive Officer and our Chief Financial Officer as
appropriate, to allow timely decisions regarding required disclosure.

|ITEM 8B. | OTHER INFORMATION.
|-------- | ------------------

On November 5, 2007, we entered into a return to treasury
agreement with Jason Dussault, our Chief Executive Officer and a director,
pursuant to which Jason has agreed to the return and cancellation of 13,000,000
shares of our common stock currently held by him. We did not provide Jason with
any compensation for such cancellation.

We have entered into a consulting agreement with Baird McLellan
Inc. to provide public and media relations services. The compensation for these
services shall be payable in 250,000 shares of our common stock and a monthly
management fee of CDN$5,500 (Five thousand and five hundred Canadian dollars)
per month, payable in equal monthly installments on the 15th day of the month to
which payment of such management fee relates.

Change in Shell Company Status

Management has determined that, given the status of our company
and the development of our business during the year ended October 31, 2007, our
company has ceased to be a shell company as defined in Rule 12b-2 of the United
States Securities Exchange Act of 1934, as amended. Please refer to the other
information contained in this annual report for a detailed description of the
development and business of our company.

For additional information, including information relating to
the description of the common stock of our company, refer to our Registration
Statement on Form SB-2 filed with the SEC on January 11, 2007.

PART III

|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL
      PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF
      THE EXCHANGE ACT.
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------

Directors and Executive Officers, Promoters and Control
Persons

All directors of our company hold office until the next annual
meeting of the stockholders or until their successors have been elected and
qualified. The executive officers of our company are appointed by our board of
directors and hold office until their death, resignation or removal from office.
Our directors, executive officers and the executive

---

27

officers of our operating subsidiaries, as well as the
positions held, age and duration of appointment for such persons are as
follows:

Name
    Position Held with our Company
    AgeTerry Fitzgerald
    Chief Executive Officer, President and Director since June
      22, 2007
    39Jason Dussault
    Treasurer, Secretary and Director since May
      10, 2007
    34Robert Mintak
    Chief Operating Officer since July 17, 2007
    45Jamie Arthur Lewin
    Chief Financial Officer since July 17, 2007
    58Jason Sundar
    Vice President of Corporate Finance since July 11, 2007
    31


Business Experience

The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each persons principal occupation during the period, and the
name and principal business of the organization by which he was employed.

Terry Fitzgerald, Chief Executive Officer, President and
Director

Mr. Fitzgerald brings to our company more than 16 years of
corporate experience in the licensing, design, entertainment, and manufacturing
arenas. After graduating from university in British Columbia, Canada, he moved
to Portland, Oregon to create the McFarlane Group of companies with partner Todd
McFarlane. Mr. McFarlane is best known as the worlds top selling comic book
artist. Together in 1992, he and Mr. Fitzgerald formed Todd McFarlane
Productions, Inc., a comic book company that to date has sold over 125 million
comic books in 30 different languages worldwide. He was then integral in the
acquisition and subsequent expansion of a corporation that would later be known
as McFarlane Toys. This company is known for its highly detailed action figures
of licensed properties such as the Simpsons, Halo, the Matrix, Kiss, Elvis, MLB,
NBA, NFL and NHL, the Terminator and the Beatles. With his vital involvement at
the executive level, the McFarlane Group has grown from a two-person
organization to one that now includes 150+ employees in four countries, with
sales in the nine-figure range, with distribution with retailing partners such
as Wal-Mart, Target, K-Mart, ToysRUs and Kaybe. As President and COO of Todd
McFarlane Entertainment, Inc., he oversaw development and production of feature
films and television series for New Line Cinema, Paramount Pictures, Universal
Pictures, Warner Bros. Pictures, Home Box Office, UPN and Fox Television. Mr.
Fitzgeralds role as producer and writer/director of these and other projects
has garnered him two Emmy Awards, two Grammy Award nominations with one win,
nine MTV Music Video Award nominations wins and one MuchMusic Music Video Award

Jason Dussault, Treasurer, Secretary and Director

Creating and collaborating with several companies over the past
15 years, Mr. Dussault has worked to take small start-up companies public,
accessing financing from U.S., Canadian and European sources and providing
corporate guidance. In 2005, after successfully raising hundreds of millions of
dollars in capital for his client companies, he finally decided to pursue his
ultimate passion. From that first inspired leap, Dussault Apparel Inc. was born.
A year later, his first line of fashions sold out almost immediately,
establishing his company and launching Dussault Custom Apparel. As our companys
creative visionary, he works with Head Designer Peter Tsang to expand on a
unique style, honing his creations through an intimate connection to some of the
worlds leading celebrities and elite from the worlds of entertainment and
sports.

Robert Mintak, Chief Operating Officer

Mr. Robert Mintak has over 25 years of experience in the retail
and wholesale industries. His track record in management includes five years
with the Robinson Group, which was named one of the 50 best managed companies in
Canada in 2005, and ten years of management experience in retail. Mr. Mintak is
also a certified lighting designer. Mr. Mintak has been the Chief Financial
Officer of Open Sundaes Bath and Body Products for the past 3 years.

---

28

Jamie Arthur Lewin, Chief Financial Officer

Mr. Lewin has 15 years of progressive experience and
responsibility in accounting, financial analysis, financial management and
business administration. Mr. Lewin has been the Chief Financial Officer for
Abenteuer Resources Corp. (TSX-V: ABU) since June of 2006 and the Manager of
Finance and Administration for CNIB BC/Yukon Division since October 2006. Mr.
Lewin has a strong work ethic and is highly developed in accounting.

Jason Sundar, Vice President, Corporate Finance

Mr. Sundar began his career working for the British Columbia
Attorney Generals office, where he developed and promoted youth programs to
protect high-risk youth. At 20 he became the youngest facilitator of corporate
training programs for Peak Performance Systems  a Brian Tracy International
Network focused on the psychology of achievement, goal setting, professional
selling skills, advances selling skills and B2B selling skills. Among their
numerous clients were Yorkton Securities and Crown Packaging. By the age of 23,
Mr. Sundar was the top performer for investor relations specialists PCMI.
Leaving that position, he partnered with Olivia Communications, raising over
five million dollars and taking the organization from three people to a staff of
24. Since founding Sundar Communications Group in 2002, he has personally raised
over $50 million for his clients worldwide.

Significant Employees

We have no significant employees beyond the directors and
officers of our company.

Family Relationships

There are no family relationships among our directors or
officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                
|3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|   |                                                                                                                                                                                                                                                                                                                                
|4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                           

Audit Committee and Audit Committee Financial Expert

We do not have an Audit Committee, our board of directors
performs the functions of an Audit Committee. The current size of our board of
directors does not facilitate the establishment of a separate committee.

Our board of directors has determined that it does not have a
member of the audit committee that qualifies as an audit committee financial
expert as defined in Item 401(e) of Regulation S-B.

We believe that our board of directors is capable of analyzing
and evaluating financial statements that present a breadth and level of
complexity of accounting issues that are generally comparable to the breadth and
complexity of

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29

the issues reasonably expected to be raised by our company. In
addition, we believe that retaining an independent director who would qualify as
an audit committee financial expert would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our development
and the fact that we have not generated revenues to date.

Other Committees of the Board

Compensation Committee

We do not have a compensation committee.

Nominating Committee

We do not have a Nominating Committee, our entire board of
directors perform the functions of a Nominating Committee and oversee the
process by which individuals may be nominated to our board of directors.

The current size of our board of directors does not facilitate
the establishment of a separate committee. We hope to establish a separate
Nominating Committee consisting of independent directors, if the number of our
directors is expanded.

Code of Ethics

Effective January 24, 2008, our companys board of directors
adopted a Code of Business Conduct and Ethics that applies to, among other
persons, members of our board of directors, our companys officers including our
President (being our principal executive officer and principal financial and
accounting officer), contractors, consultants and advisors. As adopted, our Code
of Business Conduct and Ethics sets forth written standards that are designed to
deter wrongdoing and to promote:

(1)      honest and ethical conduct,
including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;

(2)      full, fair, accurate, timely,
and understandable disclosure in reports and documents that we file with, or
submit to, the Securities and Exchange Commission and in other public
communications made by us;

(3)      compliance with applicable
governmental laws, rules and regulations;

(4)      the prompt internal reporting
of violations of the Code of Business Conduct and Ethics to an appropriate
person or persons identified in the Code of Business Conduct and Ethics; and

(5)      accountability for adherence
to the Code of Business Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other
things, that all of our companys personnel shall be accorded full access to our
president with respect to any matter which may arise relating to the Code of
Business Conduct and Ethics. Further, all of our companys personnel are to be
accorded full access to our companys board of directors if any such matter
involves an alleged breach of the Code of Business Conduct and Ethics by our
company officers.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our companys President. If
the incident involves an alleged breach of the Code of Business Conduct and
Ethics by the President, the incident must be reported to any member of our
board of directors. Any failure to report such inappropriate or

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30

irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
companys Code of Business Conduct and Ethics by another.

We will provide a copy of the Code of Business Conduct and
Ethics to any person without charge, upon request. Requests can be sent to our
company at the address on the cover of this annual report.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our
executive officers and directors, and persons who own more than 10% of our
common stock, to file reports regarding ownership of, and transactions in, our
securities with the Securities and Exchange Commission and to provide us with
copies of those filings. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting persons, we
believe that during our fiscal year ended October 31, 2007, all filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with, with the exception of the following:

Name
    Number of Late
      Reports
    Number of Transactions Not Reported on a Timely
      Basis
    Failure to File
      Requested FormsTerry Fitzgerald
    1
    1
    NilJason Dussault
    2(1)(2)
    4
    NilRobert Mintak
    1
    1
    NilJamie Arthur Lewin
    1
    Nil
    NilJason Sundar
    1
    1
    Nil


|(1) | The named officer, director or greater than 10%
      stockholder, as applicable, filed a late Form 3 - Initial Statement of
      Beneficial Ownership of Securities.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                       
|(2) | The named officer, director or greater than 10%
      stockholder, as applicable, filed a late Form 4  Statement in Changes of
      Beneficial Ownership.           

|ITEM 10. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

The particulars of compensation paid to the following
persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the year ended October 31, 2007 who had
  total compensation exceeding $100,000; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently completed financial year,
  who we will collectively refer to as the named executive officers, of our
  years ended October 31, 2007 and 2006, are set out in the following summary
  compensation table:

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31

SUMMARY COMPENSATION
      TABLEName and
      Principal Position
    Year
    Salary
      ($)
    Bon us
      ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non-Equity
      Incentive Plan Compensation ($)
    Change in Pension
      Value and Nonqualified Deferred
      Compensation Earnings ($)
    All Other
      **Compensatio** n ($)
    Total
      ($)Terry Fitzgerald(1)Chief
      Executive Officer and President
    2007 2006
    135,208.37 N/A
    0 N/A
    1,972,000.00 N/A
    0 N/A
    0 N/A
    0 N/A
    2,000.00 N/A
    2,109,208.37 N/AJason Dussault(2)Secretary
      and Treasurer
    2007 2006
    30,000.00 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    30,000.00 N/ARobert Mintak (3)Chief
      Operating Officer
    2007 2006
    18,000.00 N/A
    0 N/A
    1,500,000.00 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    1,518,000.00 N/AJamie Arthur Lewin(4)Chief Financial Officer
    2007 2006
    1,400.00 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    0 N/A
    1,400.00 N/AMark Hammer(6)Former Chief
      Executive Officer, Chief Financial Officer, Secretary and
      Treasurer
    2007 2006
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil


|(1) | Terry Fitzgerald was appointed President of our company
      on June 22, 2007.                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                               
|(2) | Jason Dussault was appointed Secretary and Treasurer of
      our company on May 10, 2007.                                                                                    
|    |                                                                                                                                                                               
|(3) | Robert Mintak was appointed Chief Operating Officer of
      our company on July 17, 2007.                                                                                    
|    |                                                                                                                                                                               
|(4) | Jamie Arthur Lewin was appointed Chief Financial Officer
      of our company on July 17, 2007.                                                                               
|    |                                                                                                                                                                               
|(5) | Jason Sundar was appointed Vice President of Corporate
      Finance of our company on July 11, 2007.                                                                         
|    |                                                                                                                                                                               
|(6) | Mark Hammer was appointed Chief Executive Officer, Chief
      Financial Officer, Secretary and Treasurer of our company on August 1,
      2006 and resigned on May 10, 2007.

Employment/Consulting Agreements

We reimburse our directors for expenses incurred in connection
with attending board meetings. We have not paid any director's fees or other
cash compensation for services rendered as a director since our inception to
October 31, 2007.

Other than as set forth below, we have no formal plan for
compensating our directors for their service in their capacity as directors,
although such directors are expected in the future to receive stock options to
purchase common shares as awarded by our board of directors or (as to future
stock options) a compensation committee which may be established. Directors are
entitled to reimbursement for reasonable travel and other out-of-pocket expenses
incurred in connection with attendance at meetings of our board of directors.
Our board of directors may award special

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32

remuneration to any director undertaking any special services
on our behalf other than services ordinarily required of a director. No director
received and/or accrued any compensation for their services as a director,
including committee participation and/or special assignments.

On July 19, 2007, we entered into consulting agreements with
Robert Mintak, our Chief Operating Officer, and Jason Sundar, our V.P. Corporate
Finance. The agreements are for three year terms. Pursuant to the terms of the
agreement with Mr. Mintak, we agreed to issue 1,500,000 restricted shares of
common stock. Pursuant to the terms of the agreement with Jason Sundar, we
agreed to issue 1,000,000 restricted shares of common stock, which will be
released in three equal annual installments after each year of service.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the discretion
of our board of directors. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors.

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $60,000 per
executive officer.

Stock Options and Stock Appreciation Rights

From the date of inception to October 31, 2007, we did not
grant any stock options or stock appreciation rights to any of our directors or
officers and there were no stock options or stock appreciation rights
outstanding on October 31, 2007.

We currently do not have a stock option plan.

Pension and Retirement Plans

Currently, we do not offer any annuity, pension or retirement
benefits to be paid to any of our officers, directors or employees, in the event
of retirement.

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT.
|-------- | ---------------------------------------------------------------------

The following table sets forth, as of February 12, 2008,
certain information with respect to the beneficial ownership of our company's
common stock by each stockholder known by us to be the beneficial owner of more
than 5% of our common stock and by each of our current directors and executive
officers and the directors and executive officers of our operating subsidiaries.
Each person has sole voting and investment power with respect to the shares of
common stock, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the shares of common stock, except as otherwise indicated. A
person is deemed to be a beneficial owner of any securities of which the person
has the right to acquire beneficial ownership within 60 days.

Name and Address of Beneficial Owner
    Position
    Amount and Nature of
      Beneficial Ownership
    Percentage of
      Class(1)Terry Fitzgerald 15217 S. 18th Avenue Phoenix, AZ
      85045
    Chief Executive Officer, President and
      director
    1,972,000
    4.53%Jason Dussault 3742 West 10th Avenue
    Secretary, Treasurer and
      director
    6,000,000
    13.80%


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33

Name and Address of Beneficial Owner
    Position
    Amount and Nature of Beneficial Ownership
    Percentage of Class(1)Vancouver, BC V6R
      2G4Jamie Arthur Lewin 2358 -349 W. Georgia
      St. Vancouver BC V6B 1Z1
    Chief Financial Officer
    Nil
    N/ARobert Mintak 3742 West 10th Avenue
      Vancouver, BC V6R 2G4
    Chief Operating Officer
    1,500,000
    3.45%Jason Sundar 9th Floor, Two Bentall
      Centre 555 Burrard Street Vancouver, BC V7X 1M8
    Vice President of
      Corporate Finance
    1,000,000
    2.23%Directors and Executive Officers as a Group
    
    10,472,000
    24.01%


|(1) | Based on 43,487,000 shares of common stock issued and
      outstanding as of February 12, 2008. Beneficial ownership is determined in
      accordance with the rules of the Securities and Exchange Commission and
      generally includes voting or investment power with respect to securities.
      Except as otherwise indicated, we believe that the beneficial owners of
      the common stock listed above, based on information furnished by such
      owners, have sole investment and voting power with respect to such shares,
      subject to community property laws where
applicable.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change of control of our
company.

|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS
|-------- | ----------------------------------------------------

Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest.

|ITEM 13. | EXHIBITS
|-------- | --------

|(a) | Pursuant to Rule 601 of Regulation SB, the
      following exhibits are included herein or incorporated by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------

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34

|Exhibit | Description                                                                                                                                                                                           
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |                                                                                                                                                                                                       
|(3)     | Articles of
        Incorporation and By-laws                                                                                                                                                         
|3.1     | Articles of Incorporation (incorporated
        by reference from our Registration Statement on Form SB-2 filed on January
        11, 2007).                                                         
|3.2     | Bylaws (incorporated
        by reference from our Registration Statement on Form SB-2 Filed on January
        11, 2007).                                                                            
|3.3     | Articles of Merger filed with
        the Nevada Secretary of State on May 29, 2007 (incorporated by reference
        from our Current Report on Form 8-K filed on June 16, 2007).                   
|3.4     | Certificate of
        Change filed with the Nevada Secretary of State on May 29, 2007 (incorporated
        by reference from our Current Report on Form 8-K filed on June 16, 2007).                
|(10)    | Material Contracts                                                                                                                                                                                    
|10.1    | Employment Agreement
        dated June 22, 2007, between our company and Terry Fitzgerald incorporated
        by reference from our Current Report on Form 8-K filed on June 25, 2007).             
|10.2    | Letter of Intent dated June 25,
        2007, between our company and Dussault Jeans Inc. (incorporated by reference
        from our Current Report on Form 8-K filed on July 2, 2007).              
|10.3    | Letter of Intent
        dated November 5, 2007 between our company and Dussault Jeans Inc. (incorporated
        by reference from our Current Report on Form 8-K filed on November 5,
        2007).
|10.4*   | Consulting
        Agreement dated July 19, 2007, between our company and Jason Sundar.                                                                                                               
|10.5*   | Consulting
        Agreement dated July 19, 2007, between our company and Robert Mintak.                                                                                                              
|10.6    | Bridge Loan Agreement dated July
        19, 2007, between our company and Dussault Jeans Inc. (incorporated by
        reference from our Current Report on Form 8-K filed on August 1, 2007).       
|(14)    | Code of Ethics                                                                                                                                                                                        
|14.1*   | Code
        of Business Conduct and Ethics.                                                                                                                                                          
|(31)    | Section 302
        Certification                                                                                                                                                                     
|31.1*   | Certification
        Statement of the Principal Executive Officer pursuant to Section 302 of
        the Sarbanes-Oxley Act of 2002.                                                                 
|31.2*   | Certification
        Statement of the Principal Accounting Officer pursuant to Section 302
        of the Sarbanes- Oxley Act of 2002.                                                               
|(32)    | Section 906 Certification                                                                                                                                                                             
|32.1*   | Certification
        Statement of the Principal Executive Officer pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of
        2002.          
|32.2*   | Certification
        Statement of the Principal Accounting Officer pursuant to 18 U.S.C. Section
        1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act Of
        2002.         

|* | Filed herewith.
|- | ---------------

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35

|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

Audit fees

The aggregate fees billed for the two most recently completed
fiscal periods ended October 31, 2007 and October 31, 2006 for professional
services rendered by John Kinross Kennedy  Certified Public Accountant for the
audit of our annual consolidated financial statements, quarterly reviews of our
interim consolidated financial statements and services normally provided by the
independent accountant in connection with statutory and regulatory filings or
engagements for these fiscal periods were as follows:

Year Ended October 31,
      2007
    Year Ended October 31, 2006Audit Fees and
      Audit Related Fees
    6,500.00
    1,250.00Tax Fees
    0.00
    0.00All Other Fees
    1,300.00
    0.00Total
    $7,800.00
    $1,250.00


Audit Fees. Consist of fees billed for professional
services rendered for the audits of our financial statements, reviews of our
interim consolidated financial statements included in quarterly reports,
services performed in connection with filings with the Securities and Exchange
Commission and related comfort letters and other services that are normally
provided by John Kinross Kennedy , Certified Public Accountant for the fiscal
years ended October 31, 2007 and October 31, 2006 in connection with statutory
and regulatory filings or engagements.

Tax Fees. Consist of fees billed for professional
services for tax compliance, tax advice and tax planning. These services include
assistance regarding federal, state and local tax compliance and consultation in
connection with various transactions and acquisitions.

We do not use John Kinross Kennedy , for financial information
system design and implementation. These services, which include designing or
implementing a system that aggregates source data underlying the financial
statements or generates information that is significant to our financial
statements, are provided internally or by other service providers. We do not
engage John Kinross Kennedy to provide compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before John Kinross Kennedy is engaged by us to
render any auditing or permitted non-audit related service, the engagement
be:

- approved by our audit committee (the functions of which are performed by
  our entire board of directors); or
- entered into pursuant to pre-approval policies and procedures established
  by the board of directors, provided the policies and procedures are detailed
  as to the particular service, the board of directors is informed of each
  service, and such policies and procedures do not include delegation of the
  board of directors' responsibilities to management.

Our entire board of directors pre-approves all services
provided by our independent auditors. All of the above services and fees were
reviewed and approved by our sole director either before or after the respective
services were rendered. Our board of directors have considered the nature and
amount of fees billed by John Kinross Kennedy and believe that the provision of
services for activities unrelated to the audit is compatible with maintaining
John Kinross Kennedy s independence.

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36

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

DUSSAULT APPAREL INC.

|By: | */s/
      Terry Fitzgerald*                                        | 
|--- | ------------------------------------------------------------------- | 
|    | Terry Fitzgerald                                                    | 
|    | Chief Executive Officer and President                               | 
|    | Principal Executive Officer,                                        | 
|    | Date: February 13, 2008.                                            | 
|    |                                                                     | 
|    |                                                                     | 
|By: | */s/ Jamie Arthur Lewin*                                            | 
|    | Jamie Arthur Lewin                                                  | 
|    | Chief Financial Officer                                             | 
|    | Principal Financial Officer and Principal Accounting
      Officer, | 
|    | Date: February 13, 2008.                                            | 

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|By: | */s/
      Terry Fitzgerald*                                        | 
|--- | ------------------------------------------------------------------- | 
|    | Terry Fitzgerald                                                    | 
|    | Chief Executive Officer and Director                                | 
|    | Principal Executive Officer,                                        | 
|    | Date: February 13, 2008.                                            | 
|    |                                                                     | 
|    |                                                                     | 
|By: | */s/ Jamie Arthur Lewin*                                            | 
|    | Jamie Arthur Lewin                                                  | 
|    | Chief Financial Officer                                             | 
|    | Principal Financial Officer and Principal Accounting
      Officer, | 
|    | Date: February 13, 2008.                                            | 
|    |                                                                     | 
|    |                                                                     | 
|By: | */s/ Jason Dussault*                                                | 
|    | Jason Dussault                                                      | 
|    | Director                                                            | 
|    | Date: February 13, 2008.                                            | 

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