UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.20549





Form 10-K





(Mark One)[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended October 31, 2012[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________





000-52452Commission File NumberDUSSAULT APPAREL INC.(Exact name of registrant as specified in its charter)Nevada
98-0513727(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)1885 Shore Drive South, South Pasadena, FL
33707(Address of principal executive offices)
(Zip Code)(727) 902-2594(Registrant’s  telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Exchange Act:Title of each class
Name of each exchange on which registeredn/a
n/a





Securities registered pursuant to Section 12(g) of the Exchange Act:Common StockTitle of  class





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.





Yes
[   ]
No
[X]





Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.





Yes
[   ]
No
[X]





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.





Yes
[X]
No
[   ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).





Yes
[X]
No
[   ]





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K.





Yes
[   ]
No
[X]





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large accelerated filer
[   ]
Accelerated filer
[   ]Non-accelerated filer
[   ]
Smaller reporting company
[X](Do not check if a smaller reporting company)





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





Yes
[  ]
No
[X]





The aggregate market value of voting and non-voting common stock held by non-affiliates of the registrant was approximately $251,295 based on the closing price of $0.0015 on April 30, 2012 (the last business day of the registrant’s most recently completed second quarter), assuming solely for the purpose of this calculation that all directors, officers and greater than 10% stockholders of the registrant are affiliates. The determination of affiliate status for this purpose is not necessarily conclusive for any other purpose.





APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY


PROCEEDINGS DURING THE PAST 5 YEARS:





Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.





Yes
[   ]
No
[   ]





APPLICABLE ONLY TO CORPORATE REGISTRANTS





Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.





353,344,347 shares of common stock issued and outstanding as of February 28, 2013





DOCUMENTS INCORPORATED BY REFERENCE





List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (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. The listed documents should be clearly described for identification purposes.





None


2


TABLE OF CONTENTS





PagePART IItem 1
Business
5Item 1A
Risk Factors
8Item 1B
Unresolved Staff Comments
13Item 2
Properties
13Item 3
Legal Proceedings
13Item 4
Mine Safety Disclosures
13PART IIItem 5
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
14Item 6
Selected Financial Data
15Item 7
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15Item 7A
Quantitative and Qualitative Disclosures About Market Risk
17Item 8
Financial Statements and Supplementary Data
17Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
18Item 9A
Controls and Procedures
18Item 9B
Other Information
20PART IIIItem 10
Directors, Executive Officers and Corporate Governance
21Item 11
Executive Compensation
23Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
24Item 13
Certain Relationships and Related Transactions, and Director Independence
25Item 14
Principal Accounting Fees and Services
26PART IVItem 15
Exhibits, Financial Statement Schedules
27SIGNATURES
28


3





Forward Looking Statements





This Annual Report on Form 10-K (“Annual Report”) contains forward-looking statements.  These statements relate to future events or our future financial performance.  A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this Form 10-K.  In some cases, you can identify forward-looking statements by terminology such as "may," "should," "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" and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.




Such risks include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.





Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  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.





The safe harbors of forward-looking statements provided by Section 21E of the Exchange Act are unavailable to issuers of penny stock. As we issued securities at a price below $5.00 per share, our shares are considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 are unavailable to us.





Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.





In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to the common shares in our capital stock.





As used in this Annual Report, the terms "we," "us," "Company," "our" and "Dussault" mean Dussault Apparel Inc., unless otherwise indicated.





4


ITEM 1.              BUSINESS




Background





The address of our principal executive office is 1885 Shore Drive South, South Pasadena, FL, 33707.  Our telephone number is (727) 902-2594.  The Company’s web-site is www.dussaultapparel.com.





Our common stock is quoted on the OTCBB and on the OTCMarkets QB under the symbol "DUSS".




Corporate History




We were incorporated on October 1, 2006 in the State Nevada under the name Release Your Lease Inc. Our initial business plan was to create a web-based service for buyers and sellers of leased automobiles. Our stock was listed for trading on the OTC Bulletin Board on March 14, 2007 under the symbol “RLYL”. A decision was made by new management, to change the corporate direction of the Company and to pursue opportunities in the retail fashion industry.




Effective June 11, 2007, we completed a merger with our wholly 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 the Company to better reflect the anticipated direction and business of the Company. On June 11, 2007, our symbol changed to “DUSS”. The subsidiary was created solely for the purpose of the merger and change of name.




Effective June 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 increased from 75,000,000 shares of common stock with a par value of $0.001 to 1,050,000,000 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.




On November 8, 2007, we opened our first retail location on Melrose Avenue, Los Angeles, California. Our Melrose location featured women’s and men’s Ready-To-Wear collections as well as jewelry, luggage and headwear. On October 31, 2008, we elected to close our store located on Melrose Avenue in Los Angeles, California and ceased all operations relating to this location. Given the losses associated with our Melrose location, and the current market circumstances for retailers, management was of the view such closure was necessary to prevent further losses and conserve working capital.




On April 15, 2009, the Company entered into an assignment of royalty with Jason Dussault. The assignment of royalty provided for the payment by Jason Dussault of 5% of the royalties received by him pursuant to a merchandising license agreement with Gene Simmons Company and USPA Accessories LLC for the license of “Moneybag” intellectual property and related products, pursuant to and in accordance with the terms and conditions of a merchandising license agreement. Jason Dussault agreed to provide sales and design services under a merchandising license agreement in consideration for royalty payments from 4.5% to 7.5% of gross income from sales derived under a merchandising license agreement. From any royalty payments that may become due and payable to Jason Dussault, Mr. Dussault has agreed to assign to our company 5% of the gross income and agreed to assign to the Company his rights, title and interest in and to the amount of the royalty. We have been advised that the underlying license agreement with Gene Simmons Company and USPA Accessories LLC has been terminated. As a result we do not receive any assigned royalty payments.




Between May 15, 2009 and July 10, 2009, we entered into consulting agreements with four (4) consultants, wherein, each of the consultants agreed to provide consulting services to the Company. Pursuant to the terms of the consulting agreements, we issued an aggregate of 2,750,000 restricted shares of our Company’s common stock.




On October 31, 2009, the Company entered into a merchandising license agreement with USPA Accessories, LLC, wherein, we agreed to provide design services under a merchandising license agreement in consideration for royalty payments of 10% of the gross income from the sales derived under a merchandising license agreement.  The collection was only a “one time” design and the agreement is no longer in place.




On November 10, 2009, the Company entered into a distribution agreement with EHM Holdings for a term of two years, for th distribution rights to Deuce Custom Ink brand throughout Canada. The agreement expired on November 10, 2011.


5




On April 9, 2010 our Company entered into an Asset Acquisition Agreement with Open Sundaes Ventures Ltd. (“Open Sundaes”) for the acquisition of certain assets relating to the business of the production and development of beauty and bath products including inventory, intellectual property and business knowhow. In consideration for the acquisition of these assets, our Company paid $43,860 and agreed to issue an aggregate of 4,000,002 shares of its common stock to the shareholders of Open Sundaes. The Asset Acquisition Agreement was approved by the shareholders of Open Sundaes at a special meeting held on April 22, 2010.We have not to date pursued the line we acquired.   After a review of the costs to pursue this line and the current financial position of the Company, we do not expect that we will pursue this line and we are looking to divest of this asset.





“Dussault Inc.” was a Canadian reality TV series which was broadcast on networks in Canada and was picked for broadcast in New Zealand by TVNZ.  Management had hoped that the association of the Dussault name would increase merchandise sales, however, the show is no longer being aired.




Our Current Business




The Company currently operates in the retail fashion industry.  The Company transitioned from being a manufacturer–wholesaler to licensing its trademark and currently has one licensor of its products selling limited merchandise. The Company also offers limited product through its website for which it shares the revenue with the licensor. Management is currently renegotiating the royalty with its licensee. The Company had a change in management during fiscal 2012 and the current focus of management is to review the current business of the Company with a view to increasing the revenues from operations and undertaking an analysis of operations to see if the current trademarks and licensing agreements can be renegotiated and if there are any further opportunities for licensing the Company’s trademarks and fashion line, while reviewing other business opportunities that may present themselves as an opportunity to bring shareholder value.




Distribution and Marketing of Our Products




Currently our products are sold on our website and through a licensing agreement with one Canadian manufacturer.




Competition




We face intense competition in the apparel industry from other established companies. A number of our competitors may have significantly greater financial, technological, manufacturing, sales, marketing and distribution resources than we do. Their greater capabilities in these areas may enable them to better withstand periodic downturns in the apparel industry, compete more effectively on the basis of price and production and more quickly develop new products. In addition, there are low barriers of entry into this industry and new companies may enter the markets in which we compete, further increasing competition in the industry. We believe that our ability to compete successfully depends on a number of factors, including the style and quality of our products and the strength of our brand name, as well as many factors beyond our control. We may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced profit margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand our development and marketing of new products, which would adversely impact the trading price of our common stock.




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.




Labelling 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.




6





Research and Development




The Company has not undertaken any research and development activities for fiscal year 2012 or 2011.




Corporate Offices




Our principal office is currently located at 1885 Shore Drive South, South Pasadena,Florida 33707 which is the office of our sole officer and director, Natalie Bannister, free of charge. .  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.




Employees




We do not currently have any employees, our sole officer and director, Natalie Bannister provides consulting services and invoices the Company a fee of $2,500 per month for such services.




Intellectual Property




We own and operate the following registered internet domain names:




·
www.dussaultapparel.com;




We own and operate the following trademark:




·
Dussault Custom Ink Trademark.




·
In addition, we acquired all rights to the tradename “Open Sundaes”. As of the date of this report no formal filing reserving this tradename has been made.




We do not have any subsidiaries.





Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.





Available Information





Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports that we file with the Securities and Exchange Commission, or SEC, are available at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding reporting companies.




7


ITEM 1A.  RISK FACTORS




An investment in our securities should be considered highly speculative due to various factors, including the nature of our business and the present stage of our development. An investment in our securities should only be undertaken by persons who have sufficient financial resources to afford the total loss of their investment. In addition to the usual risks associated with investment in a business, the following is a general description of significant risk factors which should be considered. You should carefully consider the following material risk factors and all other information contained in this Annual Report before deciding to invest in our common stock. If any of the following risks occur, our business, financial condition and results of operations could be materially and adversely affected. Additional risks and uncertainties we do not presently know or that we currently deem immaterial may also impair our business, financial condition or operating results.




Risks Relating to our Company




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, 2012, we had working capital deficit of $96,258.  Our revenues have been minimal and we expect them to remain so if we must rely solely on our current business. We have estimated that we may require up to $500,000 to during the twelve month period ended October 31, 2012 for operations and to seek additional business opportunities. There is no assurance that we will be able to obtain this funding, and if we do obtain the funding that it will be on favourable terms.   If we do not raise funds our business will fail and we may not be able to maintain the required regulatory reporting with the Securities and Exchange Commission.




We depend on third parties for 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 competitor’s products, then our ability to generate revenues through the sale of our products could be negatively impacted.




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 affect 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.




8





Our revenues are influenced by general economic cycles, diminished consumer spending may have an adverse effect on our business and financial condition.




Apparel is a cyclical industry that is dependent upon the overall level of consumer spending. Our wholesale customers anticipate and respond to adverse changes in economic conditions and uncertainty by reducing inventories and cancelling orders. As a result, factors that diminish consumer spending and confidence in any of the regions in which we compete, particularly deterioration in general economic conditions, increases in energy costs or interest rates, housing market downturns, and other factors such as acts of war, acts of nature or terrorist or political events that impact consumer confidence, could reduce our sales and adversely affect our business and financial condition. For example, the price of oil has risen in the recent past. A continued or sustained rise in oil prices could adversely affect consumer spending and demand for our products and also increase our operating costs, both of which could adversely affect our business and financial condition.




Intense competition in the worldwide apparel industry could reduce our sales and prices and adversely affect our business and financial condition.




We face a variety of competitive challenges from streetwear and casual apparel marketers, fashion-oriented apparel marketers, vertically integrated specialty stores and retailers of private-label products. Some of these competitors have greater financial and marketing resources than we do and may be able to adapt to changes in consumer preferences or retail requirements more quickly, devote greater resources to the building and sustaining of their brand equity and the marketing and sale of their products or adopt more aggressive pricing policies than we can. As a result, we may not be able to compete as effectively with them and may not be able to maintain or grow the equity of and demand for our brand. Increased competition in the worldwide apparel industry — including from international expansion of vertically integrated specialty stores, from department stores, chain stores and mass channel retailers developing exclusive labels, and from well-known and successful non-apparel brands expanding into jeans and casual apparel — could reduce our sales and adversely affect our business and financial condition.




We rely on contract manufacturing of our products. Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales, service levels and reputation.




We source our products from independent manufacturers who purchase fabric and other raw materials. As a result, we must locate and secure production capacity. We depend on independent manufacturers to maintain adequate financial resources, secure a sufficient supply of raw materials, and maintain sufficient development and manufacturing capacity in an environment characterized by continuing cost pressure and demands for product innovation and speed-to-market. In addition, we do not have material long-term contracts with any of our independent manufacturers, and these manufacturers generally may unilaterally terminate their relationship with us at any time.




Our dependence on contract manufacturing could subject us to difficulty in obtaining timely delivery of products of acceptable quality. A manufacturer's failure to ship products to us in a timely manner or to meet our quality standards could cause us to miss the delivery date requirements of our wholesale customers. In addition, any interference with our ability to receive shipments from those manufacturers, such as conditions at ports or issues that otherwise affect transportation and warehousing providers, could cause delayed delivery of product. Additionally, if we experience a significant increase in demand, or if we need to replace any of the manufacturers that we currently use, we may have to expand our third party manufacturing capacity. We cannot assure you that this capacity will be available to us, or available on terms that are acceptable to us. Failing to make timely deliveries may cause our customers to cancel orders, refuse to accept deliveries, impose non-compliance charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of which could harm our sales and margins.




9


Our success depends on the continued protection of our trademark and other proprietary intellectual property rights.




Our trademark and other intellectual property rights are important to our success and competitive position, and the loss of or inability to enforce trademark and other proprietary intellectual property rights could harm our business. Despite any precautions we may take to protect our intellectual property, policing unauthorized use of our intellectual property is difficult, expensive and time consuming, and we may be unable to adequately protect our intellectual property or determine the extent of any unauthorized use, particularly in those foreign countries where the laws do not protect proprietary rights as fully as in Canada or the United States. Our efforts to establish and protect our trademark and other proprietary intellectual property rights may not be adequate to prevent imitation or counterfeiting of our products by others or to prevent others from seeking to block sales of our products for violating their trademarks and proprietary rights. Unauthorized copying of our products or unauthorized use of our trademarks or other proprietary rights may not only erode sales of our products but may also cause significant damage to our brand names and our ability to effectively represent ourselves to our customers. Also, we cannot assure you that others will not assert rights in, or ownership of, our trademarks and other proprietary rights, that our proprietary rights would be upheld if challenged or that we would, in that event, not be prevented from using our trademarks, any of which could have a material adverse effect on our financial condition and results of operations. Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us.




Our licensees may not comply with our product quality, manufacturing standards, marketing and other requirements.




We license our trademarks to third parties for manufacturing, marketing and distribution of various products. While we enter into agreements with our licensees covering product design, product quality, sourcing, manufacturing, marketing and other requirements, our licensees may not comply fully with those agreements. Non-compliance could include marketing products under our brand names that do not meet our quality and other requirements or engaging in manufacturing practices that do not meet our standards. These activities could harm our brand equity, our reputation and our business.




Violation of labor laws and practices by our licensees or suppliers could harm our business.




We require our licensing partners and suppliers to operate in compliance with applicable laws and regulations. While our code of conduct promotes ethical business practices, we do not control our licensees or suppliers or their labor practices. The violation of labor or other laws by any of our licensees or suppliers, or divergence of a licensee's or supplier's labor practices from those generally accepted as ethical in Canada or the United States, could interrupt or otherwise disrupt the shipment of our products, harm the value of our trademarks, damage our reputation or expose us to potential liability for their wrongdoings.




Our quarterly sales and operating results fluctuate as a result of a variety of factors, including seasonal fluctuations in demand for premium apparel and related categories, and accessories, delivery date delays, recognition of stock-based compensation and potential fluctuations in our annualized tax rate, which may result in volatility of our stock price.




Our quarterly sales and operating results have varied significantly in the past and can be expected to fluctuate in the future due to a number of factors, many of which are beyond our control. For example, sales of our products have historically been somewhat seasonal in nature with the largest sales generally occurring in the second half of the year. Delays in scheduling or pickup of products by our licensing partners wholesale customers could negatively impact our revenues and results of operations for any given quarter. As a result of these specific and other general factors, our operating results will likely vary from quarter to quarter and the results for any particular quarter may not be necessarily indicative of results for the full year. Any shortfall in sales or net income from levels expected by securities analysts and investors could cause a decrease in the trading price of our common stock.




We are subject to new corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.




We may face new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently adopted by the SEC and the Public Company Accounting Oversight Board.  These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future.  In particular, under rules proposed by the SEC on October 6, 2006, we are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act.  We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act.  The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial.  We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters.  Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.




10


We depend on our sole officer and director and the loss of this individual could adversely affect our business.




Our Company is completely dependent on our sole officer Natalie Bannister, who is also our sole director.   We currently have no employees and the loss of Ms. Bannister could significantly and adversely affect our business, and could result in a complete failure of the Company. We do not carry any life insurance on our sole director and officer.




Risks Relating to an Investment in our Securities




We may, in the future, issue additional common shares that would reduce investors’ percent of ownership and may dilute our share value.




Our Articles of Incorporation authorize the issuance of up to 1,050,000,000 common shares, $0.001 par value. The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing stockholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares for future services or acquisitions or other corporate actions may have the effect of diluting the value of the common shares held by our investors, and might have an adverse effect on any trading market for our common shares.




Market for penny stock has suffered in recent years from patterns of fraud and abuse and our stock has been volatile.




Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include: (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.




Our management is aware of the abuses that have occurred historically in the penny stock market. The occurrence of these patterns or practices could in the future increase the volatility of our share price.




Our common shares are subject to the “penny stock” rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.




The SEC has adopted regulations that generally define a “penny stock” to be any equity security other than a security excluded from such definition by Rule 3a51-1 under the Securities Exchange Act of 1934, as amended. For the purposes relevant to our Company, it is any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.




Our common shares are currently regarded as a “penny stock”, since our shares are not listed on a national stock exchange or quoted on the NASDAQ Market within the United States, to the extent the market price for its shares is less than $5.00 per share. The penny stock rules require a broker-dealer to deliver a standardized risk disclosure document prepared by the SEC, to provide a customer with additional information including current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the customer's account, and to 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.


11


To the extent these requirements may be applicable they will reduce the level of trading activity in the secondary market for the common shares and may severely and adversely affect the ability of broker-dealers to sell the common shares.




FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.




In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules 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, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.




Our common stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.




Our common stock may be highly volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to) (i) the trading volume of our shares; (ii) the number of securities analysts, market-makers and brokers following our common stock; (iii) changes in, or failure to achieve, financial estimates by securities analysts; (iv) actual or anticipated variations in quarterly operating results; (v) conditions or trends in our business industries; (vi) announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; (vii) additions or departures of key personnel; (viii) sales of our common stock; and (ix) general stock market price and volume fluctuations of publicly-traded and particularly, microcap companies.




Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such shareholder litigation currently pending or threatened against the Company, such a suit against us could result in the incursion of substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover, and as noted below, our shares are currently traded on the OTCBB and, further, are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.




We have not and do not intend to pay any cash dividends on our common shares and, consequently, our stockholders will not be able to receive a return on their shares unless they sell them.




We intend to retain any future earnings to finance the development and expansion of our business. We have not, and do not, anticipate paying any cash dividends on our common shares in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.




A decline in the price of our common stock could affect our ability to raise further working capital, adversely impact our ability to continue operations and may cause us to go out of business.





A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, or convertible debt instruments, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations.  As a result, our business may suffer, we may not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.


12


ITEM 1B.           UNRESOLVED STAFF COMMENTS





None.





ITEM 2.              PROPERTIES





Our principal office is located at the offices of our sole officer and director at 1885 Shore Drive, South Pasadena, Florida who currently provides the space free of charge.   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 proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us.





ITEM 4.              MINE SAFETY DISCLOSURES




Not Applicable


13


PART II





ITEM 5.             MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters





Market Information




The Company's common stock is currently quoted on the OTCMarketsQB (OTCQB) and the Over the Counter Bulletin Board (“OTCBB”) under the trading symbol “DUSS.”  Following is a report of high and low closing bid prices for each quarterly period for the fiscal years ended October 31, 2012 and October 31, 20101.





Quarter
High ($)
Low ($)4th Quarter ended 10/31/2012
0.0028
0.00053rd Quarter ended 7/31/2012
0.0036
0.00042nd Quarter ended 4/302012
0.0039
0.00121st Quarter ended 1/31/2012
0,.0054
0.00124th Quarter ended 10/31/2011
0.014
0.0013rd Quarter ended 7/31/2011
0.0026
0.0012nd Quarter ended 4/30/2011
0.009
0.00131st Quarter ended 1/31/2011
0.01
0.005





The above information was taken from information on theOTC Markets website at www.otcmarkets.com.  The quotations provided may reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.





Holders




As of February 7, 2013, there were 56 record holders of the Company’s common stock (which number does not include the number of stockholders whose shares are held by a brokerage house or clearing agency, but does include such brokerage houses or clearing agencies as one record holder





Dividends





We have never declared or paid dividends on our common stock.  We intend to retain earnings, if any, to support the development of our business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.





Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities





Recent Sales of Unregistered Securities




During the three months ended October 31, 2012 and the subsequent period to the date of the filing of this annual report, the Company issued the following shares pursuant to a Convertible Promissory Note.




On September 5, 2012, 9,833,333 common shares at a deemed price of $0.00060; On September 24, 2012, 9,782,609 common shares at a deemed price of $0.00046.On October 4, 2012, 9,714,286 common shares at a deemed price of $0.00035. On October 11, 2012, 9,714,286 common shares at a deemed price of $0.00035.On October 31, 2012, 9,714,286 common shares at a deemed price of $0.00035.On November 12, 2012, 13,243,243 common shares at a deemed price of $0.00037.  On November 30, 2012, 12,592,593 common shares at a deemed price of $0.00027.On December 26, 2012, 11,391,304 common shares at a deemed price of $0.00023.


14


The Company claims an exemption from the registration requirements of the Securities Act of 1933, as amended, for the issuance of shares to Asher Enterprises, Inc. pursuant to Section 4(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transaction does not involve a public offering, the purchasers are “accredited investors” and/or qualified institutional buyers, the purchasers have access to information about the Company and its purchase, the purchasers will take the securities for investment and not resale.





Purchases of Equity Securities by the Issuer and Affiliated Purchasers





During each month within the fourth quarter of the fiscal year ended October 31, 2012, neither we nor any “affiliated purchaser,” as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities.




Securities Authorized for Issuance Under Equity Compensation Plans




The Company does not currently have any equity compensation plans and thus no securities have been issued.




ITEM 6.              SELECTED FINANCIAL DATA.





As a “smaller reporting company”, we are not required to provide the information required by this Item.


ITEM 7.              MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION





The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this Annual Report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those discussed in such forward looking statements.  Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Annual Report.





Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.





Background




We were incorporated on October 1, 2006 in the State Nevada under the name Release Your Lease Inc. Our initial business plan 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 the Company and to pursue opportunities in the retail fashion industry and effective June 11, 2007, we completed a merger with our wholly subsidiary Dussault Apparel Inc.   We currently operate in the retail fashion industry.





Liquidity & Capital Resources




As of October 31, 2012, our cash balance was $7,151, which is a decrease from our cash balance of $8,449 as of October 31, 2011.  Total current assets decreased to $16,651 (2012) from $34,265 (2011) as we collected accounts receivables and sales tax receivables and expended those funds for operations. Other receivables remained constant at $4,016 for 2012 and 2011. During the fiscal year ended October 31, 2012 we obtained and used a convertible loan totaling $63,000 to pay various operating expenses related to the ongoing management of the Company.   As at October 31, 2012  a total of $54,600 of the convertible loan received during the year had been converted to shares of the Company's common stock, with $8,400 remaining due and payable as at the year end.


Presently, our revenues are not sufficient to meet our operating and capital expenses. Our capital requirements are difficult to plan in light of our current strategy to limit our operations and our products.   However based on our expenditures from prior years and our determination to seek other acquisitions and to review whether we can increase our current business revenues we have estimated that we will require $500,000 over the next twelve months to pay down our existing liabilities and to continue  and grow operations.  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. We have incurred operating losses since inception, and this is likely to continue into the fiscal year ending October 31, 2013. 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 should it be required, 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.





15





Our ability to meet our financial commitments is primarily dependent upon the continued issuance of equity to new stockholders, the ability to borrow funds, and ultimately upon our ability to achieve and maintain profitable operations. There are no assurances that we will be able to obtain required funds for our continued operations or 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 other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.





There is substantial doubt about our ability to continue as a going concern, as the continuation of our business is dependent upon obtaining further short and long-term financing and 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 our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.


Results of Operations





The discussion and financial statements contained herein are for our fiscal year ended October 31, 2012 and October 31, 2011.  The following discussion regarding our financial statements should be read in conjunction with our financial statements included herewith.





We have suffered recurring losses from operations. The continuation of our Company is dependent upon us attaining and maintaining profitable operations and raising additional capital as needed. In this regard, we have successfully raised additional capital through equity offerings and loan transactions in the past and presently believe we will be able to do so in the future, though we can offer no assurance of this outcome as no specific arrangements are in place.





Comparison of the Fiscal Year Ended October 31, 2012 and October 31, 2011





During the fiscal years ended October 31, 2012 and 2011, we earned gross revenues of $30,029 as compared to $66,001, with gross profit of $30,029 in the current fiscal year as compared to $14,443 for the year ended October 31, 2011.  We experienced a substantial decline in overall sales, however,  our cost of sales was reduced from $51,558 for October 31, 2011  to $Nil for the fiscal year ended October 31, 2012 as we undertook no marketing or sales efforts internally and relied on our licensee to fund all marketing and sales efforts and costs of goods. our revenue stream was limitd to collecting royalty revenues based on a percentage of total product sold by our licensee.





For the fiscal year ended October 31, 2012, our operating expenses decreased substantially to $118,729, from $342,191in the prior year.  This decrease was mainly due to a substantial reduction in consulting fees to $12,146 for the fiscal year ended October 31, 2012 from $65,617 in the fiscal year ended October 31, 2011, as well as a substantial decrease in other administrative expenses from $126,566 (2011) as compared to $60,699 in the current fiscal year (2012).  In addition, we recorded bad debt write offs of $75,346 in fiscal 2011, with no comparable amount in the fiscal year ended October 31, 2012, a write down of obsolete inventory in 2011 totaling $13,408 with no comparative entry if the current fiscal year and professinal fees decreased from $53,577 in the fiscal year ended October 31, 2011 to $41,462 for the fiscal year ended October 31, 2012.  Our overall operational activity substantially decreased during the fiscal year ended October 31, 2012 and we recorded an operating loss totling $88,700 in fiscal 2012 as compared to $327,748 in fiscal 2011.


Other income and expenses reflect a trademark impairment charge of $192,214 in the fiscal year ended October 31, 2011 as compared to a trademark impairment charge of $12,254 for the fiscal year ended October 31, 2012 as the Company evaluated its capitalized trademark costs for recoverability and determined the recoverability of the asset to be impaired. In addition we recorded interest expenses of $72,887 in the current fiscal year, as compared to interest expenses of $20,283 in the fiscal year ended October 31, 2011 as a result of certain loans which were settled by the issuance of shares of common stock at a discount to market price on the date of issue.  Loss on conversion of debt into shares of common stock in fiscal 2011 totaled $230,456 with no comparative entry in fiscal 2012, and we recorded a gain as a result of the change in the fair value of derivative liabilities totaling $300 in fiscal 2012, as compared to a loss from the change in the fair value of derivative liabilities in fiscal 2011.





During the fiscal year ended October 31, 2012 the Company recorded a net loss of $173,541 as compared to a net loss of $773,701 in the prior fiscal year ended October 31, 2011.





16





Critical Accounting Policies and Estimates





The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our significant accounting policies are more fully discussed in the Notes to our Financial Statements.


Off- Balance Sheet Arrangements





The Company presently does not have any off-balance sheet arrangements.





ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





As a “smaller reporting company”, we are not required to provide the information required by this Item.





ITEM 8.              FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





17





DUSSAULT APPAREL INC.
  (A Development Stage Company)





REPORT AND FINANCIAL STATEMENTS







October 31, 2012
  (Stated in US Dollars)












PageAudited Financial StatementsReports of Independent Registered Public Accounting Firms
F-2 and F-3Balance Sheets
F-4Statements of Operations
F-5Statements of Stockholders' Equity
F-6Statements of Cash Flows
F-7Notes to Financial Statements
F-8 to F-16







F-1
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the Board of Directors and Stockholders of Dussault Apparel, Inc.:
 
 We have audited the accompanying consolidated balance sheet of Dussault Apparel, Inc. (“the Company”) as of October 31, 2012 and the related statement of operations, stockholders’ equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.
 
 We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
 
 In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Dussault Apparel, Inc., as of October 31, 2012, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles in the United States of America.
 
 The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company's internal control over financial reporting.  Accordingly, we express no such opinion.
 
 /s/ B F Borgers CPA PC
  B F Borgers CPA PC
 Denver, CO
 March 4, 2013
  F-2
  
 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, 2011 and 2010 and the related statements of operations, of shareholders’ equity (deficit) and of cash flows for the years ended October 31, 2011 and 2010 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, 2011 and 2010  and the results of its operations and its cash flows for the years ended October 31, 2011 and 2010 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, 2011 had not established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  These factors raise substantial doubt concerning the Company’s ability to continue as a going concern.  Its ability 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 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
 
 The Company has determined that it is not required to have, nor was I engaged to perform, an audit of the effectiveness of its documented internal controls over financial reporting.
 
 /s/John Kinross-Kennedy
 
 John Kinross-Kennedy
 Certified Public Accountant
 Irvine, California
 February 9, 2012
  F-3
  DUSSAULT APPAREL INC.


Balance Sheets





October 31,

2012


October 31,

2011

(restated)ASSETSCurrent assetsCash

$
7,151


$
8,449Accounts receivable


5,484



16,089Other receivable


4,016



4,016Sales tax  receivable


-



5,711Total current assets


16,651



34,265Property and Equipment, net


-



2,489Trademark


-



4,786Damage deposits


-



1,933Total assets

$
16,651


$
43,473LIABILITIES AND STOCKHOLDERS’ DEFICITCurrent liabilitiesAccounts payable and accrued liabilities


42,669



77,555Accounts payable – related party


42,327



-Sale tax payable


2,670



-Convertible note liabilities


8,400



-Derivative liabilities


11,100



-Total current liabilities


107,166



77,555Other LiabilitiesLoan payable – related party


12,243



12,603Convertible note liabilities, net


21,533



13,933Derivative liabilities


42,000



41,000Total Liabilities


182,942



145,091Stockholders’ EquityCommon stock  -  $0.001 par value, authorized 1,050,000, 000 shares; 316,217,207 and 180,954,893 shares issued and outstanding as at October 31, 2012 and October 31, 2011, respectively


316,216



180,954Additional paid in capital


12,136,933



12,163,327Accumulated deficit


(12,632,415
)


(12,458,874
)Accumulated other comprehensive income


12,975



12,975Total Stockholders' Deficit


(166,291
)


(101,618
)Total Liabilities and Stockholders' Deficit

$
16,651


$
43,473






The accompanying notes are an integral part of these financial statements


F-4


DUSSAULT APPAREL INC.


Statements of Operations and Comprehensive Loss





Year ended October 31,2012


2011

(restated)RevenueProducts

$
-


$
66,001Royalties


30,029



-Cost of Sales


-



51,558Gross Profit


30,029



14,443General and Administrative ExpensesProfessional Fees


41,462



53,577Consulting


12,146



65,617Advertising


-



2,863Write down inventory


-



13,408Bad debts


-



75,346Depreciation


2,489



4,814Other Administrative Expenses


60,699



126,566Uncollectible rent deposit


1,933



-Total Expenses


118,729



342,191Operating Loss


(88,700
)


(327,748
)Other Income (expense)Trademark impairment charge


(12,254
)


(192,214
)Change in fair value of derivative liabilities


300



(3,000
)Loss on conversion


-



(230,456
)Interest expense


(72,887
)


(20,283
)Net Income (Loss)

$
(173,541
)

$
(773,701
)Loss Per Common Share, basic

$
(0.00
)

$
(0.00
)Weighted Average Number of Common Shares


212,795,025



137,187,267Net Loss

$
(173,541
)

$
(773,701
)Other comprehensive incomeForeign currency translation adjustment


-



6,248Comprehensive loss

$
(173,541
)

$
(767,453
)








The accompanying notes are an integral part of these financial statements


F-5


DUSSAULT APPAREL INC.
 Statements of Stockholders’ Equity





Common stock


Additional Paid


Accumulated other


Accumulated


TotalNumber of Shares


Amount


in capital


Comprehensive Income


DeficitBalances at October 31, 2010


111,990,000



111,990



11,845,352



6,727



(11,685,173
)


278,896November 30, 2010 issued stock for loan conversion at $0.0046 per share


1,739,130



1,739



15,652



-



-



17,391December 14, 2010 issued stock for trademark at $0.0075 per share


1,413,394



1,414



9,186



-



-



10,600December 14, 2010 issued stock for services at $0.0097 per share


2,250,000



2,250



19,625



-



-



21,875January 3, 2011 issued stock for loan conversion at $0.0029 per share


3,448,276



3,448



29,311



-



-



32,759January 10, 2011 issued stock  for loan conversion at $0.0029 per share


1,379,310



1,379



12,414



-



-



13,793January 31, 2011 issued stock for services at $0.0151 per share


2,000,000



2,000



30,200



-



-



32,200February 15, 2011 issued stock for loan conversion at $0.0033 per share


3,030,303



3,030



25,152



-



-



28,182March 14, 2011 issued stock for loan conversion at $0.0023 per share


4,347,826



4,348



10,869



-



-



15,217April 20, 2011 issued stock for loan conversion at $0.0008 per share


6,250,000



6,250



6,250



-



-



12,500May 17, 2011 issued stock for loan conversion at $0.0006  per share


5,000,000



5,000



5,000



-



-



10,000June 13, 2011 issued stock for trademark at $0.001 per share


11,303



11



-



-



-



11August 15, 2011 issued stock for loan conversion at $0.0007 per share


6,428,571



6,429



4,500



-



-



10,929September 19, 2011 issued stock for loan conversion at $0.0006 per share


6,666,667



6,667



20,000



-



-



26,667September 21, 2011 issued stock for loan conversion at $0.0007 per share


7,142,857



7,143



25,714



-



-



32,857September 26, 2011 issued stock for loan conversion at $0.0006 per share


6,666,667



6,667



34,666



-



-



41,333October 3, 2011 issued stock for loan conversion at $0.0019 per share


6,842,105



6,842



44,474



-



-



51,316October 4, 2011 issued stock for loan conversion at $0.0022 per share


2,954,545



2,955



17,727



-



-



20,682October 6, 2011 issued stock for loan conversion at $0.0033 per share


1,393,939



1,394



5,436



-



-



6,830Accrued interest expense contributed to additional paid in capital


-



-



1,797



-



-



1,797Net loss for the year ended October 31, 2011


-



-



-



6,248



(773,701
)


(766,753
)Balances at October 31, 2011


180,954,893



180,954



12,163,327



12,975



(12,458,874
)


(101,618
)January 17, 2012 issued stock for trade mark, FV 0.0029


2,575,305



2,575



4,893



-



-



7,468May 11, 2012 issued stock for conversion deemed price $0.00065, FV $0.0011


8,461,538



8,462



4,900



-



-



13,362May 24, 2012 issued stock for conversion deemed price $0.00037, FV $0.0008


8,108,108



8,108



2,640



-



-



10,748June 19, 2012 issued stock for conversion deemed price $0.000029, FV $0.0007


9,441,801



9,442



2,540



-



-



11,982July 2, 2012 issued stock for conversion deemed price $0.000023, FV $0.0004


9,565,217



9,565



1,780



-



-



11,345July 10, 2012 issued stock for conversion deemed price $0.000023, FV $0.0008


9,782,609



9,783



1,940



-



-



11,723July 27, 2012 issued stock for conversion deemed price $0.000035, FV $0.0014


9,571,429



9,571



3,000



-



-



12,571July 31, 2012 issued stock for conversion deemed price $0.000048, FV $0.0017


9,375,000



9,375



4,100



-



-



13,475August 10, 2012 issued stock for conversion deemed price $0.000052, FV $0.0011


9,807,692



9,808



4,500



-



-



14,308August 23, 2012 issued stock for conversion deemed price $0.000054, FV $0.0012


9,814,815



9,815



4,600



-



-



14,415September 5, 2012 issued stock for conversion deemed price $0.000060, FV $0.0011


9,833,333



9,833



5,000



-



-



14,833September 24, 2012 issued stock for conversion deemed price $0.000046, FV $0.0007


9,782,609



9,783



3,400



-



-



13,183October 4, 2012 issued stock for conversion deemed price $0.000035, FV $0.0007


9,714,286



9,714



2,400



-



-



12,114October 11, 2012 issued stock for conversion deemed price $0.000035, FV $0.0008


9,714,286



9,714



3,000



-



-



12,714October 31, 2012 issued stock for conversion deemed price $0.000035, FV $0.0009


9,714,286



9,714



3,000



-



-



12,714Loss on conversion of the convertible notes, May 11, 2012 to October 31 2012


-



-



(78,087
)


-



-



(78,087
)Net loss for the year ended October 31, 2012


-



-



-



-



(173,541
)


(173,541
)Balances at October 31, 2012


316,217,207


$
316,216


$
12,136,933


$
12,975


$
(12,632,415
)

$
(166,291
)








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


F-6


DUSSAULT APPAREL INC.
 Statements of Cash Flows
 Year ended October 31,2012


2011Operating activities:Net loss

$
(173,541
)

$
(773,701
)Adjustments to reconcile net loss to net cash used by operating activities:Stock issued for services


-



54,075Stock issued for intellectual property


7,468



10,611Stock issued to settle loans payable, including interest expense


-



320,456Depreciation


2,489



4,063Change in fair value of derivative liabilities


(300
)


3,000Damage deposit


1,933



-Amortization on the debt discount


66,800



13,933Accrued interest on the notes


6,087



-Write down inventory


-



13,408Bad debts


-



75,346Impairment charges - trademark


4,786



192,214Occupancy fee against loan receivable


-



36,781Foreign exchange loss related party loan


(360
)


-Change in operating assets and liabilities:Accounts receivable


10,605



(16,089
)Account payable


1,354



63,583Inventory


-



28,140Sales tax payable


2,670



-Sales tax receivable


5,711



(5,711
)Net cash flows provided by (used in) operating activities


(64,298
)


20,109Investing Activities:Purchase of trade mark


-



(13,679
)Net cash used in investing activities


-



(13,679
)Financing activities:Proceeds from related party loan


-



16,132Repayment of related party loan


-



(3,529
)Repayment of loan payable


-



(50,000
)Proceed from of Loan payable


63,000



-Net cash provided by (used in) financing activities


63,000



(37,397
)Effect of exchange rates on cash


-



8,583Net decrease in cash


(1,298
)


(22,384
)Cash and equivalents, beginning of period


8,449



30,833Cash, end of period

$
7,151


$
8,449Supplemental cash flow disclosures:Cash paid for interest

$
-


$
-Cash paid for income taxes

$
-


$
-Non cash transactions:Stock issued for services

$
-


$
54,075Stock issued for intellectual property


7,468



10,611Stock issued to settle loans payable, including interest expense


54,600



320,456$
62,068


$
385,142









F-7


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012








Note 1 – Basis of Presentation and Nature of Operations





These unaudited financial statements reflect all adjustments which, in the opinion of management, are necessary to fairly state the Company’s financial position and the results of its operations for the periods presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.





Organization





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. Business operations had not commenced when in May, 2007, control of the company changed hands. Jason Dussault bought 1,500,000 common shares of the majority shareholder and assumed the offices of President, CEO, CFO, Secretary and Treasurer, and a Director.





On June 11, 2007 Release Your Lease Inc. effected a reverse forward merger with Dussault Apparel, Inc., a Nevada shell company. The name was changed to Dussault Apparel Inc. The Company changed its orientation toward the retail fashion clothing business. The Company opened a retail clothing and accessory store on Melrose Avenue in Los Angeles in November, 2007. Designs were produced in the Vancouver, Canada office, manufactured in China and warehoused in Los Angeles. The Company closed this store in November, 2008 in the wake of declining sales and deteriorating economic conditions.





Current Business of the Company





The Company moved operations to Vancouver in 2009. In the spring of 2011 its design and head office moved to Los Angeles California where it was designing apparel for its licensing partner, the Company continues to market over the internet a very limited line of apparel. Our Apparel is designed in Los Angeles and samples manufactured by our licensing partner in North America. The Company has transitioned from being a manufacturer–wholesaler toward licensing its trademark to other wholesalers in the primarily in the Canadian market, while promoting its marque. The Company also purchased the trademark of a cosmetics line. Currently no sales, production or sampling of the cosmetic line has occurred or is planned.  The Company is currently reviewing its business and is seeking other acquisitions, as sales have declined year over year.





Note 2 – Summary of Significant Accounting Policies





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.


F-8





DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012





Note 2 – Summary of Significant Accounting Policies (continued)





Foreign Currency Translation





The functional currency of the Company is the Canadian Dollar. The Company uses the United States dollar as its reporting currency. All transactions initiated in Canadian Dollars are translated to U.S. Dollars in accordance with ASC 830-10-20 “Foreign Currency Translation” as follows:





·
Revenue and expense items at the average rate of exchange in effect on the transaction date;





·
Non-monetary assets and liabilities at historical exchange rates, unless such items are carried at market, in which case they are translated at the exchange rate in effect on the balance sheet date; and





·
Monetary assets and liabilities at the exchange rate at the balance sheet date.





Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income (loss). Therefore, translation adjustments are not included in determining net income but reported as other comprehensive income.





For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.





Fair value of financial instruments





The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:





·
Level 1: Quoted prices in active markets for identical assets or liabilities.





·
Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.





·
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.





The following are the major categories of liabilities measured at fair value on a recurring basis as of October 31, 2012 and 2011, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):





2012


2011Derivative liabilities
Level 3

$
53,100


$
41,000





F-9


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012





Note 2 – Summary of Significant Accounting Policies (continued)





Derivative Liabilities





Fair value accounting requires bifurcation of embedded derivative instruments, such as ratchet provisions or conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.





Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.





Loss Per Common Share





Net loss per share is calculated in accordance with FASB ASC 260, 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 potentially dilutive securities in convertible loans payable; however the conversion would be anti-dilutive and is not considered in the calculation.





Royalty Income




The Company receives royalty income from licensing third parties to use its intellectual property.  Presenlty we  receive a royalty of 50% of the total sales, net of all costs of goods, returns, marketing expenses, shipping costs and fees. During the fiscal year ended October 31, 2012 this is the Company’s sole revenue stream, and includes both in-store and internet sales.  In prior years,  royalty income was shown within other income as the income derived from royalties was not material to revenue in periods prior to the current fiscal year and was considered incidental. However, as a result of a change in our business model at the close of fiscal 2011, royalty income has become the main source of the Company’s recorded revenue. For this reason, the Company considers that the revised income statement presentation, which reflects royalty income as revenue, will provide more reliable and relevant information than the presentation adopted previously. The 2011 income statements for the fiscal year ended October 31, 2011 have been adjusted to reflect the new presentation. During the fiscal year ended October 31, 2011 a total of $33,955 related to royalty income is included in revenue reported. During the current period presentation, all income presented has been derived from royalties or commissions on sales under license agreements.





Recent Accounting Pronouncements





ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment is applicable to fiscal years beginning after December 15, 2011. Early application is permitted. The Company does not expect this ASU has a material impact on its financial position or carrying value of its intangible assets at this time.





The Company does not expect the adoption of any other recent accounting pronouncements will have a material impact on its financial statements.


F-10


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012





Note 2 – Summary of Significant Accounting Policies (continued)





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, 2012 had not established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.





As shown in the accompanying financial statements, the Company continues to incur losses. Its ability to continue as a going concern is dependent on the successful stimulation of wholesale sales or in other areas 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.





Note 3 – Restatement





A prior period adjustment was made to the October 31, 2011 financial statements for an accounting error. An embedded derivative in a convertible note payable had not been identified under ASC 815-40.  The effect of disclosing the derivative liability was recorded as a prior period adjustment to Deficit and to accumulated expense amounts in the current year.   The note payable was also reclassified in the restatement. (ref Note 6 – (a))





Item

As Originally

Reported

($)


As Restated

($)


Effect on

Earnings

($)


Effect on

Net Equity

($)Balance SheetOther liabilitiesLoan payable


38,000



-



-



(38,000
)Convertible notes, net


-



13,933



-



13,933Derivative liabilities


-



41,000



-



41,000Statement of OperationsDerivative loss


-



(3,000
)


(3,000
)


(3,000
)Interest expense on amortization


-



(13,933
)


(13,933
)


(13,933
)(16,933
)


-





Note 4 - Trademarks





On April 9, 2010 the Company entered into an asset acquisition agreement (the “Agreement”) with Open Sundaes Ventures Ltd. (“Open Sundaes”) for the acquisition of certain assets relating to the business of the production and development of beauty and bath products including inventory, intellectual property and business knowhow. In consideration for the acquisition of these assets, the Company paid $43,860 and agreed to issue an aggregate of 9,000,002 shares of its common stock to the shareholders of Open Sundaes and certain creditors. The Agreement was approved by the shareholders of Open Sundaes at a special meeting held on April 22, 2010. As of October 31, 2011, the Company had issued a total of 6,424,697 shares pursuant to the Agreement, 1,424,697 shares to the shareholders of Open Sundaes and 5,000,000 shares to a creditor of Open Sundaes in settlement of certain debt related to Open Sundaes that was agreed to be paid between the parties. The Company recorded the fair value of Trade Mark based on the fair value of shares issued and cash payments, which amount totaled $197,000. On October 31, 2011, in accordance with corporate policies, the Company assessed the Trademark for impairment and determined the book value was no longer recoverable. As a result we have recorded a loss on impairment relating to the Trademark of $192,214, leaving a value of $4,786 on the balance sheets of the Company as at October 31, 2011. On January 17, 2012, the Company issued the remaining 2,575,305 shares pursuant to the Agreement, fully satisfying the terms of the acquisition. As at the date of these financial statements, the Company has issued a total of 9,000,002 shares; 4,000,002 shares to the shareholders of Open Sundaes and 5,000,000 shares to a creditor of Open Sundaes.





F-11


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012





Note 4 – Trademarks (continued)





The Company capitalized the fair value of the 2,575,305 shares issued on January 17, 2012 in the amount of $7,468. On October 31, 2012, in accordance with corporate policies, the Company assessed the Trademark value for impairment and determined to fully impair the $12,254, including a total of $4,786 on the balance sheet as at October 31, 2011.





Note 5 - Inventory





The Company receives royalty income from licensing third parties to use its intellectual property.   The Company ceased carrying inventory during the fiscal year ended October 31, 2011 and does intend to carry inventory.





Note 6 – Convertible Promissory Note and Derivative Liabilities





(a)  Perati Finance Corporation





On April 1, 2010 the Company issued a promissory note to Perati Finance Corporation for $38,000. The note matures in five years and accrues interest at 3%. The loan is convertible to common stock with conversion price is the greater of $0.01 or 50% of the average closing bid prices for the ten trading days immediately preceding the conversion date.





In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.





Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.





We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.





As a result of the application of ASC No. 815 in fiscal years ended October 31, 2012 and 2011, the fair value of the conversion feature is summarized as follow:





Derivative liabilities, October 31, 2010

$
-Fair value at the commitment date for $38,000 convertible notes


38,000Fair value, mark to market adjustment


3,000Derivative liabilities, October 31, 2011


41,000Fair value mark to market adjustment


1,000Derivative liabilities, October 31, 2012

$
42,000





The Company recorded the debt discount to the extent of the gross proceeds raised, and recorded the derivative expense immediately the remaining value of the gross proceeds as it exceeded the derivative liabilities. The Company recorded a derivative expense of $1,000 and $3,000 for 2012 and 2011 respectively.




F-12


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012








Note 6 – Convertible Promissory Note and Derivative Liabilities (continued)




(a)
Perati Finance Corporation (continued)




Commitment Date


Re-measurement

October 31, 2011


Re-measurement

October 31, 2012Expected dividends


0
%


0
%


0
%Expected volatility


293.92
%


280.60
%


317.54
%Expect term

5 years


4 years


3 yearsRisk free interest rate


2.35
%


0.41
%


0.38
%





Amortization of the $38,000 discount over the fiscal year ended October 31, 2012 and October 31, 2011 are $7,600 and $13,933, respectively, which amount has been recorded as interest expense and is reflected on the Company's balance sheet as Convertible Note Liabilities, Net.  The unamortized discount of $16,467 will be expensed in  future fiscal years.





As of October 31, 2012, accrued interest on the note totaled $1,143, which is reflected in accounts payable and accrued liabilities.





(b)
Asher Enterprises Inc.





On November 10, 2011, Asher Enterprises Inc. funded a promissory note executed by the Company on October 25, 2011 in the total amount of $63,000. The note matured July 27, 2012 and accrues interest at 8% or alternately 22% in the event of default. The loan is convertible to common stock at a conversion price of 58% of the market price.





In our evaluation of the financing arrangement, we concluded that the conversion features were not afforded the exemption as a conventional convertible instrument and it did not otherwise meet the conditions set forth in current accounting standards for equity classification. Accordingly, they do not meet the conditions necessary to obtain equity classification and are required to be carried as derivative liabilities.





Since equity classification is not available for the conversion feature, we were required to bifurcate the embedded conversion feature and carry it as a derivative liability, at fair value. Derivative financial instruments are carried initially and subsequently at their fair values.





We estimated the fair value of the compound derivative on the inception dates, and subsequently, using the Black-Scholes Merton valuation technique, adjusted for the effect of dilution, because that technique embodies all of the assumptions (including, volatility, expected terms, and risk free rates) that are necessary to fair value complex compound derivate instruments.





During the year ended October 31, 2012, the Company converted debt totaling $54,600 into 132,687,009 shares of common stock resulting in a loss on conversion of $78,087, leaving $8,400 of convertible notes matured with conversion.





As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follow:





Derivative liabilities, October 31, 2011

$
-Fair value at the commitment date for $63,000 convertible notes


59,200Fair value mark to market adjustment


(1,300
)Reclassification to additional paid in capital for financial instruments that ceased to be a derivative liability


(46,800
)Derivative liabilities, October 31, 2012

$
11,100


F-13


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012








Note 6 – Convertible Promissory Note and Derivative Liabilities (continued)





(b)
Asher Enterprises Inc. (continued)





The Company recorded the debt discount to the extent of the gross proceeds raised, and recorded the derivative income immediately the remaining value of the gross proceeds as it exceeded the derivative liabilities. The Company recorded a derivative income of $1,300 and $nil for 2012 and 2011 respectively.





The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions as of October 31, 2012:





Commitment Date


Re-measurement Date

October 31, 2012Expected dividends


0
%


0
%Expected volatility


316.16
%

317,54% ~ 365.33%Expect term

0.22 years


0.01 ~ 0.21 yearsRisk free interest rate


0.09
%


0.09
%





Amortization of the discount over the fiscal year ended October 31, 2012 totaled $59,200, which amount has been recorded as interest expense.





As of October 31, 2012, accrued interest on the note totaled $4,944,which is reflected in accounts payable and accrued liabilities.





Note 7 – Common Stock





On January 17, 2012, the Company issued the remaining 2,575,305 shares pursuant to the agreement with Open Sundaes. This issuance completed the consideration to be provided under the agreement with Open Sundaes (Note 3 – Trademarks, above).





On May 11, 2012, $5,500 of the original balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 8,461,538 common shares at a deemed price of $0.00065.





On May 24, 2012, $3,000 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 8,108,108 common shares at a deemed price of $0.00037.





On June 19, 2012, $2,800 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,441,801 common shares at a deemed price of $0.00029.





On July 2, 2012, $2,200 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,565,217 common shares at a deemed price of $0.00023.





On July 10, 2012, $2,250 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,782,609 common shares at a deemed price of $0.00023.





On July 27, 2012, $3,350 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,571,429 common shares at a deemed price of $0.00035.





On July 31, 2012, $4,500 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,375,000 common shares at a deemed price of $0.00048.


F-14


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012








Note 7 – Common Stock (continued)





On August 10, 2012, $5,100 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,807,692 common shares at a deemed price of $0.00052.





On August 23, 2012, $5,300 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,814,815 common shares at a deemed price of $0.00054.





On September 5, 2012, $5,900 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,833,333 common shares at a deemed price of $0.00060.





On September 24, 2012, $4,500 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,782,609 common shares at a deemed price of $0.00046.





On October 4, 2012, $3,400 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,714,286 common shares at a deemed price of $0.00035.





On October 11, 2012, $3,400 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,714,286 common shares at a deemed price of $0.00035.





On October 31, 2012, $3,400 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 9,714,286 common shares at a deemed price of $0.00035.





As at October 31, 2012 there were a total of 316,217,207 shares issued and outstanding.





Note 8 – Related Party Transactions





On October 4, 2012, the Board of Directors received the resignation of Mr. Jason Dussault as Chief Executive Officer, President, Secretary and Treasurer of Dussault Apparel Inc. (the “Corporation”).





As of October 31, 2011, the former President of the Company, Jason Dussault advanced funds in the amount of $12,603 (CAD$12,500) to the Company for working capital. During the fiscal year ended October 31, 2012, the Company did not make any cash payments to Jason Dussault, leaving $12,243 (CAD$12,500) on the balance sheet as loan payable – related parties.The amounts are unsecured, non-interest bearing and due on demand.





On June 1, 2012 the Company entered into a month to month consulting agreement with Rodhan Management and Consulting Services (“Rodhan”) for the provision of administrative, consulting and website maintenance services.  The agreement provides for services to be charged based on work performed during each month at an hourly rate. Mr. Robert Mintak, the Company's Chief Financial Officer and Chief Operating Officer, also provides consulting services to Rodhan and acts as their Chief Financial Officer. During the period ended October 31, 2012, Rodhan Management invoiced totaling amount of $ 17,175 (CAD$17,360) plus applicable taxes for the services rendered. The Company made cash payments in the amount of $13,962 (CAD$14,080), leaving $3,213 (CAD$3,280) on the balance sheet as accounts payable – related parties.





On July 11, 2012, Ms. Natalie Bannister was appointed as a Director of Dussault Apparel Inc. (the “Corporation”).On October 4, 2012, , with the resignation of Mr. Jason Dussault as an officer and director of the Company, Ms. Bannister  consented to act as Chief Executive Officer, President, Secretary and Treasurer in addition to her role as a director.




During the fiscal year Ms. Bannister charged the Company $7,500 for consulting fees which amount is included in the account payable – related parties and remains outstanding as at October 31, 2012.


F-15


DUSSAULT APPAREL INC.


NOTES TO THE FINANCIAL STATEMENTS


FOR THE FISCAL YEAR ENDED OCTOBER 31, 2012





Note 9 – Subsequent Events





On November 12, 2012, $4,900 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 13,243,243 common shares at a deemed price of $0.00037.





On November 30, 2012, $3,400 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 was retired by the issuance of 12,592,593 common shares at a deemed price of $0.00027.





On December 26, 2012, $100 of the remaining balance of a Convertible Promissory note entered into on October 25, 2011 with accrued interest of $2,520 was retired by the issuance of 11,391,304 common shares at a deemed price of $0.00023.





On December 31, 2012, the Board of Directors received the resignation of Mr. Robert Mintak as Chief Financial Officer of the Company, making Ms. Bannister the sole officer and director of the Company.








F-16


ITEM 9.              CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





In the fiscal years ended October 31, 2012 and 2011, there have been no changes in the Company’s accounting policies, nor have there been any disagreements with our accountants.





ITEM 9A.           CONTROLS AND PROCEDURES





Evaluation of Disclosure Controls and Procedures





Our management, under supervision and with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e).  Based upon this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of October 31, 2012, because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective.





Disclosure controls and procedures are controls and other procedures that are designed to ensure that required information to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods 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 required information to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.





Management’s Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 14d-14(f).  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.





All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can only provide reasonable assurance with respect to financial reporting reliability and financial statement preparation and presentation.  In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.





Management assessed the effectiveness of our internal control over financial reporting as of October 31, 2012.  In making the assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.   Based on its assessment, management concluded that, as of October 31, 2012, our internal control over financial reporting was not effective and that material weaknesses in ICFR existed as more fully described below.





As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements” established by the Public Company Accounting Oversight Board (“PCAOB”), a material weakness is a deficiency or combination of deficiencies that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.  In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of October 31, 2012:





1)
Lack of an independent audit committee or audit committee financial expert, and no independent directors.  We do not have any members of the Board who are independent directors and we do not have an audit committee.  These factors may be counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management;





2)
Inadequate staffing and supervision within our bookkeeping operations.  We have one consultant involved in bookkeeping functions, who provides two staff members.  The relatively small number of people who are responsible for bookkeeping functions and the fact that they are from the same firm of consultants prevents us from segregating duties within our internal control system.  The inadequate segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews. This may result in a failure to detect errors in spreadsheets, calculations or assumptions used to compile the financial statements and related disclosures as filed with the SEC;





18


3)
Outsourcing of our accounting operations.  Because there are no employees in our administration, we have outsourced all of our accounting functions to an independent firm.  The employees of this firm are managed by supervisors within the firm and are not answerable to the Company’s management.  This is a material weakness because it could result in a disjunction between the accounting policies adopted by our Board of Directors and the accounting practices applied by the independent firm;





4)
Insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements;





5)
Ineffective controls over period end financial disclosure and reporting processes.





Management's Remediation Initiatives





As of October 31, 2012, management assessed the effectiveness of our internal control over financial reporting.  Based on that evaluation, it was concluded that during the period covered by this report, the internal controls and procedures were not effective due to deficiencies that existed in the design or operation of our internal controls over financial reporting.  However, management believes these weaknesses did not have an effect on our financial results.  During the course of their evaluation, we did not discover any fraud involving management or any other personnel who play a significant role in our disclosure controls and procedures or internal controls over financial reporting.





Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses.  We will not be able to do so until, if ever, we acquire sufficient financing and staff to do so.  We will implement further controls as circumstances, cash flow, and working capital permits.  Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the period ended October 31, 2012, fairly presents our financial position, results of operations, and cash flows for the periods covered, as identified, in all material respects.





Management believes that the material weaknesses set forth above were the result of the scale of our operations and intrinsic to our small size.  Management also believes that these weaknesses did not have an effect on our financial results.





We are committed to improving our financial organization.   As part of this commitment, we will, as soon as funds are available to the Company (1) appoint outside directors to our board of directors sufficient to form an audit committee and who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and to increase our personnel resources.  We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary, and as funds allow.





This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to  the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.





19


Changes in Internal Control over Financial Reporting





During the period covered by this report, there were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.




Item 9B.              Other Information




None.


20


PART III





ITEM 10.            DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE





Executive Officer and Directors




The following individuals serve as the directors and executive officers of our Company as of the date of this annual report.




Name
Position Held with Our Company
Age
Date First Elected or

AppointedNatalie Bannister
Chief Executive Officer, President, Treasurer, Chief Financial Officer, Secretary and Director
37
July 11, 2012





Our Board of Directors consists of only one class. All of the directors will serve until the next annual meeting of stockholders; until their successors are elected and qualified; or until their earlier death, retirement, resignation or removal. There are no family relationships among directors and executive officers. There are no arrangements or understandings between any director or executive officer and any other person(s) pursuant to which a director or executive officer was selected. Our executive officers are elected by our Board of Directors and hold office until their death, resignation or removal from office





Our Board of Directors believes that the Board and our executive officer possessesa range of talent, skill, and experience sufficient to provide sound and prudent guidance with respect to our operations and interests. The information below with respect to our sole director and officer includes the individual’s experience, qualifications, attributes, and skills that led our Board of Directors to the conclusion that he or she should serve as a director and/or executive officer.





We know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us, or our subsidiaries, or has a material interest adverse to us or our subsidiaries.





None of our executive officers or directors have been involved in any bankruptcy proceedings within the last five years, been convicted in or has pending any criminal proceedings, been subject to any order, judgment or decree enjoining, barring, suspending or otherwise limiting involvement in any type of business, securities or banking activity or been found to have violated any federal, state or provincial securities or commodities law.





Business Experience




The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.




Natalie Bannister, Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and Director




Ms. Bannister was appointed a director of the Company on July 11, 2012 and on October 4, 2012, she was appointed Chief Executive Officer, President, Treasurer, and Secretary.   On December 31, 2012 , she was appointed Chief Financial Officer and is currently the Company’s sole officer and director.  Ms. Bannister has a long history in the brokerage and financial advisory business, having held a number of positions in the industry. Ms. Bannister is currently the owner and President of Natalie Bannister Consulting, having formed the company in October, 1997. Natalie Bannister Consulting is a firm offering services related to the public reporting markets, including a full range of domestic and international Investor Relations and Public Relations services, merger and acquisition consulting and she also provides reference services to securities counsel and accountants for clients in the OTC markets.




From February 2009 to August 2009, she was employed at Wachovia Securities – Wells Fargo Advisors as an International Accounts Review Analyst, Latin America Risk and Control where her responsibilities were to review and approve new accounts for the Latin American Anti-Money Laundering Group, address risk management and suitability concerns for option and margin account requests., and regulatory, compliance, and operational reviews of new international account forms and daily orders.




From January 2007 to March 2008, she was the branch manager, Raymond James Financial Services, Farmington, Missouri, where she was responsible for the review and approval of new accounts, the review of daily trading activity, and review the receipt of funds or securities, as well as addressing risk management, concentration and client-related suitability issues in a timely manner, the respondent to home office inquiries on behalf of branch office, participation in compliance examinations and interviews and the preparation of monthly compliance reports.




She has also previously held positions with Lincoln Financial Advisors, Stifel, Nicolaus& Company and National Capital LLC.





21





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 our chief financial officer (being our 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 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.


Nominating Committee





There have been no material changes to the procedures by which security holders may recommend nominees to the Company's board of directors.





Audit Committee





At this time, the Company is not required to have an audit committee. Further, since there no independent members of the Board it is not feasible at this time to have an audit committee. The Board of Directors performs the same functions as an audit committee. The Board of Directors in performing its functions as an audit committee has determined that it does not have an audit committee financial expert.





Section 16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers, and stockholders holding more than 10% of our outstanding common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in beneficial ownership of our common stock.  Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.





Based on a review of Forms 3, 4, and 5 and amendments thereto furnished to the registrant during its most recent fiscal year ending October 31, 2012, there were no late filings.





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ITEM 11.            EXECUTIVE COMPENSATION.




The particulars of the 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 years ended October 31, 2012 and 2011; 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 years ended October 31, 2012.




who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.




SUMMARY COMPENSATION TABLEName

and Principal

Position
Year
Salary

($)
Bonus

($)
Stock

Awards

($)
Option

Awards

($)
Non-Equity

Incentive Plan

Compensation

($)
Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings

($)
All

Other

Compensati

on

($)
Total

($)Natalie Bannister(1)

Chief Executive Officer, President, Treasurer, Secretary and director
2012
7,500
Nil
Nil
Nil
Nil
Nil
Nil
7,500Jason Dussault(2)

Chief Executive

Officer, President,Treasurer,Secretaryanddirector
2011

2011
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

NilRobert Mintak

Chief Operating

Officer and Chief

Financial Officer
2011

2010
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil


(1)Ms. Bannister was appointed to the Board of Directors on July 11, 2012 and to the officer positions on October 4, 2012(1)Mr. Dussault resigned all officer positions and as a director on October 4, 2012





Outstanding Equity Awards at Fiscal Year-End





None





Option Grants and Exercises





We do not currently have any stock option plans.  There were no other option grants during fiscal 2012 or 2011.





Employment Agreements





We have not entered into employment agreements with our directors and officers.   We have a verbal  agreement with Ms. Bannister for the provision of management services payable at $2,500 per month.





23





Compensation of Directors





During the most recent fiscal year, no directors were provided any compensation.





The Company has made no arrangements for the cash remuneration of its directors, except that they will be entitled to receive reimbursement for actual, demonstrable out-of-pocket expenses, including travel expenses, if any, made on the Company’s behalf.





Compensation Committee





We do not currently have a compensation committee.  Should our officers become compensated in the future, the Principal Executive Officer’s executive compensation will be approved by our Board of Directors. For all other executive compensation contracts, the Principal Executive Officer will negotiate and approve the contracts and compensation.





ITEM 12.            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.





Security Ownership of Certain Beneficial Owners





Based on 353,444,347 shares of common stock issued and outstanding as of February 8, 2013, there were no beneficial owners holding more than 5% of the outstanding common stock, taking into account beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable 5% stockholders have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.





Security Ownership of Management





The following table shows, as of February 8,2013, the shares of the Company’s common stock beneficially owned by each director (including each nominee), by each of the executive officers and by all directors and executive officers as a group. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable officers and directors have the right to exercise in the next 60 days) are exercised and additional shares of common stock are issued.





Title of Class
Name of Beneficial Owner
Amount and Nature

of Beneficial Ownership
Percentage of Class (1)Common Stock
Natalie Bannister
-0-
0%All Officers and Directors as a Group
-0-
0%





(1)Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. All shares of common stock subject to options or warrants exercisable within 60 days of February 8, 2013 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding beneficially owned for the purpose of computing the percentage ownership of any other person. Subject to the paragraph above, the percentage ownership of outstanding shares is based on 353,444,347shares of common stock outstanding as of February 8, 2013.





Changes in Control





There are no existing arrangements that may result in a change in control of our company.





Securities authorized for issuance under equity compensation plans.





None




24





ITEM 13.            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE





Certain Relationships and Related Transactions





On October 4, 2012, the Board of Directors received the resignation of Mr. Jason Dussault as Chief Executive Officer, President, Secretary and Treasurer of Dussault Apparel Inc. (the “Corporation”).





As of October 31, 2011, the former President of the Company, Jason Dussault advanced funds in the amount of $12,603 (CAD$12,500) to the Company for working capital. During the fiscal year ended October 31, 2012, the Company did not make any cash payments to Jason Dussault, leaving $12,243 (CAD$12,500) on the balance sheet as loan payable – related parties.The amounts are unsecured, non-interest bearing and due on demand.





On June 1, 2012 the Company entered into a month to month consulting agreement with Rodhan Management and Consulting Services (“Rodhan”) for the provision of administrative, consulting and website maintenance services.  The agreement provides for services to be charged based on work performed during each month at an hourly rate. Mr. Robert Mintak, the Company's Chief Financial Officer and Chief Operating Officer, also provides consulting services to Rodhan and acts as their Chief Financial Officer. During the period ended October 31, 2012, Rodhan Management invoiced totaling amount of $ 17,175 (CAD$17,360) plus applicable taxes for the services rendered. The Company made cash payments in the amount of $13,962 (CAD$14,080), leaving $3,213 (CAD$3,280) on the balance sheet as accounts payable – related parties.





On July 11, 2012, Ms. Natalie Bannister was appointed as a Director of the Company.On October 4, 2012, with the resignation of Mr. Dussault, Ms. Bannister as the sole remaining director consented to act as Chief Executive Officer, President, Secretary and Treasurer in addition to her role as a director until such time as a replacement for the respective officer positions can be found.





During the fiscal year Ms. Bannister charged the Company $7,500 for consulting fees which amount is included in the account payable – related parties and remains outstanding as at October 31, 2012.





Review, Approval or Ratification of Transactions with Related Persons





We do not currently have any written policies and procedures for the review, approval or ratification of any transactions with related persons.





Promoters and Certain Control Persons





None





Parents





None




Director Independence





As of the date of this Annual Report, we do not have any independent directors.





We have developed the following categorical standards for determining the materiality of relationships that the directors may have with the Company. This information is not available on our Web site because such site is currently under development.





25





A director shall not be deemed to have a material relationship with the Company that impairs the director's independence as a result of any of the following relationships:





1.
the director is an officer or other person holding a salaried position of an entity (other than a principal, equity partner or member of such entity) that provides professional services to the Company and the amount of all payments from the Company to such entity during the most recently completed fiscal year was less than two percent of such entity’s consolidated gross revenues;2.
the director is the beneficial owner of less than five (5%) per cent of the outstanding equity interests of an entity that does business with the Company;3.
the director is an executive officer of a civic, charitable or cultural institution that received less than the greater of one million ($1,000,000) dollars or two (2%) per cent of its consolidated gross revenues, as such term is construed by the New York Stock Exchange for purposes of Section 303A.02(b)(v) of the Corporate Governance Standards, from the Company or any of its subsidiaries for each of the last three (3) fiscal years;4.
the director is an officer of an entity that is indebted to the Company, or to which the Company is indebted, and the total amount of either the Company's or the business entity's indebtedness is less than three (3%) per cent of the total consolidated assets of such entity as of the end of the previous fiscal year; and5.
the director obtained products or services from the Company on terms generally available to customers of the Company for such products or services. The Board retains the sole right to interpret and apply the foregoing standards in determining the materiality of any relationship.





The Board shall undertake an annual review of the independence of all non-management directors. To enable the Board to evaluate each non-management director, in advance of the meeting at which the review occurs, each non-management director shall provide the Board with full information regarding the director’s business and other relationships with the Company, its affiliates and senior management.





Directors must inform the Board whenever there are any material changes in their circumstances or relationships that could affect their independence, including all business relationships between a director and the Company, its affiliates, or members of senior management, whether or not such business relationships would be deemed not to be material under any of the categorical standards set forth above. Following the receipt of such information, the Board shall re-evaluate the director's independence.





ITEM 14.            PRINCIPAL ACCOUNTANT FEES AND SERVICES




The aggregate fees billed for the most recently completed fiscal year ended October 31, 2012 and for the fiscal year ended October 31, 2011 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:




Year EndedOctober 31, 2012

$
October 31, 2011

$Audit Fees
7,000
6,000Audit Related Fees
1,500
7,000Tax Fees
2,098
-All Other Fees
-
-Total
11,598
13,000




Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.




Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.




26


PART IV





ITEM 15.            EXHIBITS, FINANCIAL STATEMENT SCHEDULES




Exhibits:


NO.
IDENTIFICATION OF EXHIBIT3.1
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
Incorporated by reference from our Form 8-K filed on June 16, 2007.3.4
Certificate of Change
Incorporated by reference from our Form 8-K filed on June 16, 200710.1
Distribution Agreement dated November 10, 2009, between our company and EHM Holdings.
Incorporated by reference from our Quarterly Report on Form 10-Q filed on March 22, 2010.10.2
Merchandising License Agreement dated October 31, 2009, between our company and USPA Accessories, LLC.
Incorporated by reference from our Quarterly Report on Form 10-Q filed on March 22, 2010.23.1
Consent of Independent Registered Public Accountant
Filed herewith31.1
Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith31.2
Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed herewith32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Filed herewith





Financial Statements.




The following financial statements are included in this report:




PageAudited Financial Statements
F-1Reports of Independent Registered Public Accounting Firms
F-2 and F-3Balance Sheets
F-4Statements of Operations
F-5Statements of  Changes in Stockholders’ Equity
F-6Statements of Cash Flows
F-7Notes to Audited Financial Statements
F-8 to F-16







27


SIGNATURES





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





DUSSAULT APPAREL INC.Date:
March 6, 2013
By:
/s/ Natalie BannisterName:
Natalie BannisterTitle:
Chief Executive Officer and President (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)








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.





Date:
March 6, 2013
By:
/s/ Natalie BannisterName:
Natalie BannisterTitle:
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)














28